Keefe, Bruyette notes that on Monday, the House rejected legislation creating a Troubled Asset Relief Program, 205-228. In the wake of the vote, Congress is trying to pick up the pieces and pass the bill. Firm thinks it will take a few days to put a deal back together. In the end, they continue to believe that a bill will be passed.
Washington failed for several reasons to pass the TARP. However, Wall Street's reaction to the failure will, in Keefe's opinion, move Congress to finish the bill in several days.
Political leadership in both parties needs to do a better job of convincing voters of the need for the TARP and they think the market's reaction to the bill's failure will help them make that case.
Cooler heads will, in their opinion, prevail over the coming days. House members will need a few days to decompress but the firm continues to believe that a bill will pass in the coming week or two.
They think the biggest question is how Congress will pass a bill—what will it look like? Increased deposit insurance coverage could be part of a revised bill.
Notablecalls: Hence we are in green territory in the pre market.