Wall Street Slumps on Failure of Boehner's Fallback Plan for 'Cliff'
House Speaker John Boehner's failure to gather enough votes for a plan to avert the fiscal cliff sent stocks tumbling on Friday but the drop was by no means the kind of stomach-churning free fall that some have feared.
House leadership's decision to pull the "Plan B" off the floor late on Thursday night left investors nervous that Capitol Hill won't reach a deal with the White House to prevent the country from going over a fiscal cliff, the Beltway shorthand for the combination of automatic tax hikes and spending cuts that are set to take effect at the start of the new year. The Dow Jones industrial average fell 121 points, or 0.9 percent, on Friday. The Standard & Poor's 500 Index fell 14 points, or about 0.9 percent.
Wall Street has long been nervous about these negotiations. Indeed, the Dow actually fell further the day after Obama's reelection, when it dropped 313 points amid worries over the fiscal-cliff standoff.
The drama has some looking back to 2008, when the rescue of Wall Street — dubbed the Troubled Asset Relief Program — passed Congress during the depths of the financial crisis. Although the first vote failed, panic-selling on Wall Street persuaded wary lawmakers to get behind the legislation. The decline in the aftermath of TARP's failure, however, was more than five times as large as the drop on Friday.