So, on Wednesday the revised bailout bill rescue plan was passed in the Senate. Friday the House voted for it then the same afternoon President Bush signed it. So what happens now?
Well first the markets should become less volatile. It has also raised the FDIC insurance on deposits from $100,000 to $250,000. Which would make some depositors feel safer about leaving their money in the bank.
However, the bailout rescue plan will not stave off a recession if it is to occur. We’re losing jobs faster than people can find new ones. In September 159,000 jobs were lost (this is the largest one month drop in 5 years). Companies are letting go of people because they’re worried that consumers will cut spending. This is a very negative cycle. Another problem is that even though the bill was put into place to help alleviate the credit crunch, it will be a while before banks will start lending again. They are still dealing with bad mortgages and defaults on loans, the rescue plan is going to help with those. After the bad loans, perhaps in a year or so banks will begin lending again.