Following yesterday's bipartisan defeat (subscription req'd) of the Emergency Economic Stability Act of 2008 (EESA, for short), many analysts are left scratching their heads and wondering "What comes next?" After equity markets tanked yesterday, some optimism has returned that Congress will come back later in the week and pass something, anything. Whether new provisions such as lifting deposit insurance limits are included remains to be seen. Should that fail, is there a Plan C? However, several things remain likely until any legislation starts to have an impact: credit markets will stay troubled, some businesses will have a lot of difficulty borrowing, and more banks could falter (here and here).

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