Stock Market's Losses Build as Bailout Vote Nears

Updated from 10:53 a.m. EDT

Stocks on Wall Street plunged Monday as traders awaited action by Congress on government support for the financial sector and assessed Citigroup's (C Quote) government-assisted purchase of Wachovia (WB Quote).

The Dow Jones Industrial Average dropped 283 points to 10,860, and the S&P 500 lost 44 points to 1169. The Nasdaq plummeted 86 points to 2097.

Over the weekend, Congress was finalizing the Treasury's $700 billion bailout proposal to aid the floundering financial sector. A report from the Associated Press indicated that the House of Representatives would vote on the bill Monday, and the Senate would follow suit later in the week.

Peter Morici, professor at the University of Maryland's Robert H. Smith School of Business, wrote in an email, "The bailout hardly restricts executive compensation. Those provisions are vague, except for golden parachutes, and really only apply to banks the government would take over."

Morici also wrote that the possibility of the government taking equity positions in banks doesn't necessarily mean that firms' management practices will change.

Hugh Johnson, chief investment officer at Johnson Illington Advisors, said he's more optimistic. "Given time, if properly executed, this plan should work," he said. He also said he's confident Federal Reserve Chairman Ben Bernanke will take further action if the proposed legislation fails to mitigate credit-market unrest.

The FDIC announced early Monday that Citigroup was buying the senior and subordinated debt as well as banking operations of Wachovia, in a deal facilitated by the Federal Deposit Insurance Corp. The FDIC said that Wachovia did not fail. Shares of Wachovia fell from Friday's closing price of $10 to 94 cents.