Wow, that was fast! After saying "no" on Monday, the House of Representatives did an about face and sent the Paulson Plan to President Bush who signed it into law an hour and a half after the final votes were cast.

Now what? Will it work?

That depends on whether banks take losses on the securities they sell to the government. This gets tricky.

Until recently, Commercial Paper was an obscure part of the bond market most investors didn’t care about. But these securities are now squarely in the spotlight—as the credit crisis has spread to even the shortest term corporate debt market.

Corporate Paper is not a new investment vehicle and its history is actually rather interesting. According to Wikipedia, it has been around since the 19th Century. The online encyclopedia says Marcus Goldman, the founder of Goldman Sachs, got his start trading commercial paper in 1869. However, the securities really became popular in the 1980s, as an investment vehicle for money market funds seeking higher yields than Treasuries but safety of principal.

My parents ran a small business for 40 years in Central Illinois and banked at the same community bank for most of that time. My father and the bank's president were long-time friends. I recall my dad saying that he often secured loans with only a handshake to buy new equipment or make other improvements.

That type of relationship seems somewhat quaint and unsophisticated at a time when most of us bank online, get cash from ATM machines, secure mortgages through brokers, and basically never interact personally with a banker. It could also speak volumes about how the nation got itself into the current banking crisis.

Greetings from the other coast. That is, the coast (west) opposite the one from which I usually report (east). I'm in silicon valley working on a story you will see later this month, but that's not the point. The point is, things are different here than they are in New York. The financial industry crisis is NOT the dominant topic on the news and it is NOT seen as a looming disaster. Business here is going on as usual.

NBR's Darren Gersh isn't one to toot his own horn (too much), so I thought I'd write this entry. During Monday's Congressional debate about the bailout plan (which we all know eventually failed to get enough votes in the House of Representatives), Senator Lamar Alexander (R - Tennessee) read part of a Darren Gersh report on the floor of the U.S. Senate. You can watch the clip below.

Add mark-to-market to the list of things you need to know about this financial crisis. After the S&L crisis and scandals at Enron, WorldCom, etc., the Financial Accounting Standards Board -- known affectionately as the FASB (Faz-bee) -- made changes to mark-to-market (or fair value) accounting to bring greater transparency to financial transactions. However, the current financial crisis has led some in the industry to rethink mark-to-market accounting. One of the concerns with this type of accounting is that requiring assets to carry a current market price (though they may have a greater future value) could push a depressed market even lower.

Groups representing accountants, institutional investors, and consumer advocates say suspending mark-to-market accounting rules is totally irresponsible and not in the best interest of investors. The Center for Audit Quality says mark-to-market accounting has helped investors understand the severity of the financial situation, but it did not create the crisis.

Some quick thoughts on the House voting down the Paulson plan:

1) This isn't over. If the markets continue to fall, pressure will build for Congress to revisit this decision.

2) This fight is also over the future of the Republican Party. It's likely, based on the polls, that Republicans will end up losing the White House and ending up with much smaller margins in Congress. If that is the likely scenario, then Republican conservatives in the House have an incentive to plant the flag now and rally their party to their principles. Voting against a government bailout plan is one way to lay the groundwork for a new party.

Make no mistake, the decision to let Lehman fail was Henry Paulson's. The Federal Reserve might have wanted to arrange a bailout, but without the political blessing of the Bush Administration, the central bank has no power to step in.

The only person who could give that blessing was Henry Paulson.

Did Paulson make the right call? Does it matter?

I woke up my father on the west coast this morning to both commiserate over the end-of-the-season swan song our beloved Chicago White Sox seem to be performing and to welcome him to my bank. He, you see, was until late last night a customer of Washington Mutual. This morning he joins me at JPMorgan Chase.

He asked me a few weeks ago if he needed to do anything to protect his accounts. I told him no, since they are within the insurance limits of the Federal Deposit Insurance Corporation. I told him not to be surprised if some morning he awoke to the news that he was now a customer of some other bank, or that his accounts were being managed directly by the FDIC in receivership.

Things are moving fast in Washington, but here are some quick thoughts on the House Republican plan to sell government insurance against bad assets.

Key question: will it lead to market pricing for assets? If not, would the government just end up insuring a lot of bad debt that is still impossible to value?

It's possible an insurance plan would merely delay the write down of assets and therefore leave the government on the hook for the face value of debt which continues to fall in value.