October 3, 2008

On Monday the U.S. House of Representatives rejected the initial economic bailout proposal - sending stock markets around the world into a freefall.

Support for this plan was almost evenly split among U.S. consumers, according to ChangeWave's latest survey, conducted in late September. Nearly half of the 2,347 respondents (48%) agreed with the bill, while another 45% disagreed with it:

Among those in support, the vast majority said it's necessary to restore stability and confidence in the financial sector. Here's a handful of examples:

• FGO47266 writes, "The consequences of leaving the market to figure this out will cause massive swings in the stock market and a lot more job losses. The bailout will, hopefully, make this an orderly transition. The magnitude of the problem seems to be huge as banks cannot even tell how much of these toxic assets they have. The stimulus package and its spending masked the problem for a while, but it's still there."

• TVE94410 writes, "The credit markets are currently frozen, which is causing a multitude of issues. Banks don't want to loan to other banks and financial institutions, causing downgrades in business ratings - which result in large margin calls. This causes panic in the financial industry, global markets, and with consumers. Basically a self-fulfilling prophecy of market failure and potential depression."

• MAS66713 writes, "Even though I think the individuals responsible for this problem should pay, I feel that if the government doesn't do something now we will all suffer much more if the financial system fails."

Many supporters, however, also pointed to the need for additional oversight and regulation to prevent future reoccurrences.

As MPO03200 puts it, "The government should preserve the backbone of the financial markets and increase regulations and oversight." (To review additional responses, click here.)

Among respondents who disagreed with the plan, MLE5165 criticized it because there was "no oversight, no accountability and a huge taxpayer-funded transfer of wealth to the very people that created this mess." Other respondents added:

• LEO96014 writes, "We have privatized the gains and socialized the risks. This plan places the risk squarely on the shoulders of the taxpayer and lets the faulty party (the financial institutions) off the hook."

• GAR97745 writes, "Let the chips fall where they may and maybe we will learn our lesson. If we keep bailing out poor judgment and poor leadership we will never learn."

• HUF09406 writes, "The devil is in the details. The government cannot be a sugar daddy for poor business practices. I fear taxpayers will be stuck with huge debts that are others' responsibility."

(For more responses from those who disagree with the plan, click here.)

Still, others are more mixed on the matter. ORA96973 doesn't support the plan, but concedes that "it has to be done." JBS26317 thinks there aren't any other viable options.

As we write this, the House is debating the latest provisions to the plan - which were approved by the Senate on Wednesday.

And with public interest at extreme levels, the stakes today couldn't be higher.

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