Mmmm, market over-reaction

So there is a credit crisis but the markets today went crazy and over-reacted and lost more in one day than they've ever gone down before (number wise, not percentage wise).

So republicans tried to saddle democrats with the bill (thinking that democrats were going to whole heartedly support it) and then they were going to run against the democrats on this. There was also some far right resistance because they hate regulations and accountability for corporations.

There were also some moderate democrats (who also didn't vote for this for electoral reasons) also did it because they are budget hawks and hate spending for anything.

There were progressive democrats who didn't support it because they think it's irresponsible, not the only way to improve the economy, and more bullying by an irresponsible administration.

All of these groups claim to want to protect the taxpayers. I'm not sure how much truth there is to that but I do think that a great portion of the crisis is created by stock holder panic.

Credit is tightening but that is due in large part to the mega banks making crappy loans and cooking the books (or lying to themselves about risk). Here's a question: where are the small regional banks who were less greedy and made sound investments and have decent liquidity? I imagine that they could really grow in a situation like this. I'm sure credit would still drastically tighten but isn't this how the markets work? Some corporations are irresponsible and have to sell their assets (even good ones) at firesale prices to corporations who can take on a little extra risk if it comes cheap. Or maybe the large corporations just sell off pieces of themselves at firesale prices until they achieve some liquidity and can survive as smaller companies.

Bail out home owners who were preyed upon but I'm still needing a really good explanation to bail out some greedy bastards.