MELISSA BLOCK, host:
And now to the markets. NPR's Jim Zarroli has been following the numbers in New York as a bad day on Wall Street became a horrendous one. He joins us now. Jim, explain what happened in the stock market today when it started becoming clear that this vote would fail.
JIM ZARROLI: Oh, was really extraordinary. I mean, the stock market had been down for much of the day anyway. The Dow was down 200 or 300 points. But then, when the vote started and you know, as it went on, there was a point at which you could see that the vote was going to fail. And then in the space of really just a few minutes, you could see the Dow fall 500, 600, 700 points. I mean, it was really scary. This is a volatile time in the markets overall, as you know, but we haven't seen a single-day decline like that since, I think since September 11th.
BLOCK: And the final decline at the end of the day, it closed down more than 700 points, down more than 6 percent?
ZARROLI: Yes, right, just over 6 percent.
BLOCK: What about the other markets, Jim? Bonds, commodities, what was happening there?
ZARROLI: The same thing. I mean, you could see oil prices just plunge. You know, a price of a barrel of oil fell $10. That often happens when people see evidence that the economy is declining because, you know, when the economy declines, people use less oil, demand falls, prices fall. One of the other things that happen when the economy is in trouble is that people pull their money out of, you know, investments like stocks and bonds and so on, and put them into government Treasury bills, which are still seen as safe even with all the problems we have right now. So the interest rate falls, and that is also what happened today. You could see the yield on the Treasury bills just drop really fast. So there was just this immediate reaction from the financial markets. And it really spoke volumes about the importance of this legislation.
BLOCK: Well, it sounds like this huge drop in the markets does suggest that Wall Street thought that the bailout was going to work.
ZARROLI: Yeah, I think it means - I think it suggests that they hoped it was going to work. I mean, you definitely could find people who think - thought that this bailout was not necessary in the markets, not a good idea and they've - think we've seen these problems because of mortgage-backed securities, but the market can correct itself. You know, there's going to be a lot of pain, but if you give the economy time to sort of bring these excesses out, we'll get out of this situation eventually. That's what some people think. But I think most people on Wall Street wanted the government to do something because we've just seen this remarkable course of events lately: investment banks failing where, you know, huge erosion in business confidence, nobody wants to lend to anybody else. And I think people think, you know, they're seeing things spiral out of control, and even if the bailout plan wasn't perfect, it was something.
BLOCK: And utterly dire predictions coming from the Treasury secretary, Henry Paulson; the Fed chair, Ben Bernanke. What is at stake for the economy if no bailout plan emerges and is approved?
ZARROLI: Well, I think the stakes are very large. For instance, one way to measure what's happening is by looking at the credit markets. The London Interbank Offered Rate, or LIBOR, considered a key gauge of how willing banks are to lend to each other, and when it goes up, it means people are getting scared. It's been high for weeks. It shot up even more today. That's a bad thing to happen because, you know, a lot of forms of credit in this country are tied to the rate. So it makes it harder for businesses to borrow. And when they can't borrow, the economy grinds to a halt or, you know, it even declines.
BLOCK: OK, NPR's Jim Zarroli in New York talking about the day on Wall Street after the defeat of the financial bailout bill in the House of Representatives today. Jim, thanks very much.
ZARROLI: You're welcome.
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