Paulson's plan is rejected by the Senate during an intriguing game of Cat and Mouse. It's a little like the Prisoner's Dilemna - if I vote yes, and everyone else votes no, I have just committed Political Suicide.
If you were a Bank in the US, what would you do to try to force the hand of Congress?
The banks just stopped lending to each other. The credit market looks dryer than the proverbial Outback, but it could easily be more to do with Wall Street's own cleverness in attempting to shift their liabilities onto the public at large than with any real increase in risk this week. After all, without the Paulson Plan, the system is coping the Darwinian way - the strong are eating the weak. The major difference between a bailout and the status-quo is who loses, not how much will be lost. That can't be changed.
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