from the October 1, 2008 edition

Reporter Mark Trumbull discusses how Americans view the failed congressional bailout plan of the financial system.

No wonder Americans aren't happy about the ideas being considered to resolve the deepening financial crisis. The task is to choose among bad options – and to do so in a hurry.

But amid all the debate about whether "Main Street" should bail out "Wall Street," the reality has also been sinking in for many that those two streets aren't that far apart.

Inaction in a financial crisis, moreover, carries its own price tag – a cost that economists generally say is much higher than that of a bailout.

That's one way to look at what happened Monday, when US stock shares lost more than $1 trillion in market value after a House "no" vote on a financial rescue bill – an amount greater than the rescue package itself.

But if that seemed like a signal from markets for Congress to "do something, anything," many Americans still cringe instinctively at the idea of government bailouts and rushed legislation.

"Who does this benefit? Who's getting bailed out? The higher-ups of these companies," says Kevin McGrath, a Boston musician, voicing a concern shared by millions. "But if we don't do it, the middle class aren't going to have retirement savings."

Many economists don't like the bailout plan, as proposed by the Treasury Department and revised by Congress last weekend, any better than ordinary Americans do. But they generally see stark consequences if there's an ongoing collapse in credit markets – the flow of loans for everything from small businesses to people who want to buy cars or expand a credit line.

All that is based on what's already happened. With a deeper credit crunch, challenges on Main Street could grow still larger.

It's a concern shared by small businesses around the country.

"No one, least of all small-business owners, is happy that this bailout is necessary," the National Federation of Independent Business said in a statement Monday before the House vote. "They did not create this mess.... But they understand that their ability to access credit to grow their business, send their kids to college, and save for retirement depends upon stability in financial markets."

Those points echoed the message of President Bush last week in a rare prime-time address to the nation.

Yet millions of Americans don't buy this line of reasoning.

Anger, moral principle, and distrust of policymakers or bankers create considerable opposition to the notion that banks should get special help now.

Pat Craig, a Boston software consultant, says the $700 billion plan for the government to purchase troubled debts "was just too fast. It just wasn't the right bill.... People don't want to pay off the rich guys with hedge funds."

But beneath all the frustration, and even rage, many also call for pragmatism.

"I don't think we should bail them out, but then again I'm seeing my 401(k) basically just getting hacked to death," says Ron Starns, a business owner in Sunnyvale, Calif., of his retirement nest egg. "The cost of the economy being so bad is being passed on to the consumer."

Bankers, especially those who packaged and peddled high-risk mortgage securities, won't win any popularity contests these days. But in the vast web of activities that make up the US economy, banks and other financial firms play a vital role as facilitators.

In recent days, that role has come under growing threat. Lenders have become increasingly fearful that their own sources of funding from investors are drying up. They're also uncertain about the health of peers to whom they would normally extend overnight loans as part of the ebb and flow of credit.

Federal agencies have intervened in an ad hoc way, with commitments already totaling billions of dollars.

Among the avenues where a finance crunch affects Main Street:

•Jobs. If businesses can't borrow, or if their borrowing costs rise, it's harder for them to expand. Many would be forced to cut costs with layoffs.

•Home prices. A steep housing downturn might get deeper, as that squeeze on borrowing sidelines potential buyers.

•Government services. A financial downturn could depress tax revenues and the ability of local governments to raise money in bond markets. The result: cuts in services and public jobs. Massachusetts is among the states considering emergency budget cuts.

•Investments. Nearly half of Americans are counting on an employer-sponsored retirement plan, such as a 401(k), to provide an important part of their long-term security. Another 26 percent say the same about Individual Retirement Accounts. The stock market, as seen this week, hinges heavily on the outlook for credit and the economy.

Larry Trigg, an industrial designer in Mountain View, Calif., figures his mix of stocks and bonds has lost 12 percent of its value this year. He says he's losing a bit of sleep over it, but is wary of government intervention that could spend a lot of money with uncertain results.

"Even if stocks take a hit, government cannot be in the business of preventing every type of accident or any unforeseen calamity that comes around because of mismanagement," he says.

Opinion surveys taken in the past dozen days reflect the full range of public concerns – from the desire to take action to skepticism about the original bailout plan (see chart).

Abraham Medhin, a tax manager in Boston, sees negative consequences if the government can't enact a rescue plan. "It's going to impact people from A to Z," he says. "The money is there, but no [lenders will] open the door. Everybody's afraid."

• Mary Knox Merrill and Tony Avelar contributed to this story.