That collapse occurred due to the market's reaction to the failure of the rescue package.
The number bandied about since Treasury Secretary Henry Paulson's proposed package has been circling $700 billion.
The great protectors of the market, a.k.a. the House Republican, balked at signing off on a plan that had a $700 billion tag laid on it, a figure no one could really verify, pin down or stand behind. As a result, $1.2 trillion in value vanished in a matter of hours.
Had the bill passed, the normal legislative and executive process would take over and things would have continued, the market would have likely responded positively and the process of trying to untangle this gordian knot would proceed. The $700 billion figure is a fixation, but the final figures are unknowable at this point. A steady, but slow, accumulation of selected assets through this bill may have allowed the private investors to return in confidence, thus reducing the need for government intervention.
Now, however, we are perhaps worse off that we were had there been no vote at all. How many of the Republican members' assets were part of that $1.2 trillion that evaporated thanks to their inaction?