Minor relief felt after Senate passed bill

October 1, 2008 12:00:00 AM PDT
There is reaction on all sides to the new version of the bailout, including reluctant support from experts who were highly critical of the original three page plan.

Action taken on Capitol Hill Wednesday night has garnered strong reaction from top Bay Area economists who understand the ins and outs of the bailout plan.

"If the choices between this bill and economic Armageddon, this is a good bill," says Former U.S. Secretary of Labor Robert Reich, a U.C. Berkeley economist.

Reich by no means, loves this plan, but in the end he supports it.

"This plan is much better than what Hank Paulsen originally proposed. The three page, blank check, 'Give me everything' and no questions asked, that's what he wanted. He did not get it and that would have been a terrible bill," says Reich.

"It's a compromise, it's good, I think that they passed it," says Jonathan Berk, Ph.D., professor of finance from Stanford University.

Berk didn't always feel this way. He is one of a 192 professors and economists who signed a petition opposing the original bailout plan for being "unfair" and "ambiguous." This plan he says, shows promise.

"A lot of us feel the risks were too high to find out what would happen if we didn't bail them out, nobody wants a great depression," says Berk.

The market closed before the senate voted, but afterhours trading shows a slight drop in the futures market. Marketwatch's Alistair Barr thinks the numbers show investors don't have full faith in the bill's passage. Just because the Senate approved it, doesn't guarantee its success in the House.

"The markets will be volatile, up and down on Thursday, not really going anywhere, and then on Friday, if the vote takes place and it's good, then you might get a relief rally," says Barr.

Now the wait is on for the House vote on Friday.


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