How is the 2009 stimulus package different from the 2008 bail out plan?

Mortgage rates increased following the news of the bailout plan. The 30-year fixed-rate mortgage averaged 5.78% in the week before the plan was announced; for the week ending September 25, the average rate was 6.09%,63 still far below the average rate during the early 1990s recession, when it topped 9.0%. There was concern that the current plan created a conflict of interest for Paulson.

Paulson was a former CEO of Goldman Sachs, which stood to benefit from the bailout. Paulson has hired Goldman executives as advisors and Paulson's former advisors have joined banks that were also to benefit from the bailout. Furthermore, the original proposal exempted Paulson from judicial oversight.

Thus there was concern that former illegal activity by a financial institution or its executives might be hidden. The treasury staff member responsible for administering the bailout funds was Neel Kashkari, a former vice-president at Goldman Sachs. Protests opposing the bailout occurred in over 100 cities across the United States on Thursday September 25. 70 Grassroots group TrueMajority said its members organized over 251 events in more than 41 states.

71 The largest gathering has been in New York City, where more than 1,000 protesters gathered near the New York Stock Exchange along with labor union members organized by New York Central Labor Council. 7273 Other grassroots groups have planned rallies to protest against the bailout,74 while outraged citizens continue to express their opposition online through blogs and dedicated web sites. In a survey conducted September 19–22 by the Pew Research Center, by a margin of 57 percent to 30 percent, Americans supported the bailout when asked "As you may know, the government is potentially investing billions to try and keep financial institutions and markets secure.

In a survey conducted September 19–22 by Bloomberg/Los Angeles Times, by a margin of 55 percent to 31 percent, Americans opposed the bailout when asked whether "the government should use taxpayers' dollars to rescue ailing private financial firms whose collapse could have adverse effects on the economy and market, or is it not the government's responsibility to bail out private companies with taxpayers' dollars?". In a survey conducted September 24 by USA Today/Gallup, when asked "As you may know, the Bush administration has proposed a plan that would allow the Treasury Department to buy and re-sell up to $700 billion of distressed assets from financial companies. What would you like to see Congress do?", 56 percent of respondents wanted Congress to pass a plan different from the original Paulson proposal, 22 percent supported the Paulson proposal in its initial form, and 11 percent wanted Congress to take no action.

Senator Sherrod Brown said he had been getting 2,000 e-mail messages and telephone calls a day, roughly 95 percent opposed. As of Thursday September 25, Senator Dianne Feinstein's (D-Calif.) offices had received a total of 39,180 e-mails, calls and letters on the bailout, with the overwhelming majority of constituents against it. Former British Prime Minister Gordon Brown supported the plan, saying that it was essential to restore stability to the markets.

The then presidential candidates from both major parties, Senators Barack Obama (D) and John McCain (R), voted in favor of the Senate version of the bill on October 1, 2008. Senator John McCain claimed he suspended his presidential campaign and negotiated on behalf of wavering House of Representatives members to urge them to support the legislation. Former Arkansas Governor and 2008 Presidential Candidate Mike Huckabee has criticized the bailout saying it socializes the risks amongst top members.

"This plan is stunning in its scope and lack of detail," said Connecticut Senator Christopher Dodd, chairman of the Senate Banking Committee. "I am concerned that Treasury's proposal is neither workable nor comprehensive, despite its enormous price tag," said Alabama Senator Richard Shelby, the ranking Republican on the committee. "The Paulson plan will not bring a stop to the slide in home prices.

But the Paulson plan will spend 700 billion taxpayer dollars to prop up and clean up the balance sheets of Wall Street. This massive bailout is not a solution. It is financial socialism and it's un-American," said Sen.

Jim Bunning, R-Ky. Then Democratic presidential candidate Barack Obama said any bailout must include plans to recover the money, and protect working families and big financial institutions and be crafted to prevent such a crisis from happening again. Texas Republican U.S. Representative and former two-time presidential candidate Ron Paul publicly opposed any bailout and called for other type of reforms to remedy the crisis.

Democratic opponents of the bailout include Oregon U.S. Representative Peter DeFazio, who called for a modified Tobin tax on stock transactions to pay for any bailout,90 and California Congressman Brad Sherman, who compared the bailout to a ransom demand for "$700 billion in unmarked bills". Republican opponents of the bailout include Texas U.S. Representative Ted Poe, who gave a speech on the House floor comparing the dire economic warnings of the bailout's proponents to the Y2K scare,92 and Michael C. Burgess, who accused the House leadership of declaring "martial law" to pass the legislation without debate.

After negotiations, bipartisan groups of Congressional leaders were willing to support the highly revised plan. Despite the leaders' support, the rest of the House of Representatives did not follow their lead. In a Wall Street Journal opinion piece, Senator Hillary Clinton has advocated addressing the rate of mortgage defaults and foreclosures that ignited this crisis, not just bailing out Wall Street firms: "If we do not take action to address the crisis facing borrowers, we'll never solve the crisis facing lenders."

She has proposed a new Home Owners' Loan Corporation (HOLC), similar to that used after the Depression, which was launched in 1933. The new HOLC would administer a national program to help homeowners refinance their mortgages.