Stunning Defeat For Economy Bailout; Stocks Plunge

WASHINGTON (AP) - In a stunning vote that shocked the capital
and worldwide markets, the House on Monday defeated a $700 billion
emergency rescue for the nation's financial system, ignoring urgent
warnings from President Bush and congressional leaders of both
parties that the economy could nosedive without it.

Stocks plummeted on Wall Street, beginning their plunge even
before the 228-205 vote to reject the bill was officially announced
on the House floor.

The Dow Jones industrials sank nearly 700 points for the day.

Democratic and Republican leaders alike said they were committed
to trying again, though the Democrats said GOP lawmakers needed to
provide more votes. Bush huddled with his economic advisers about a
next step.

In the House chamber, as a digital screen recorded a cascade of
"no" votes against the bailout, Democratic Rep. Joe Crowley of
New York shouted news of the falling stocks. "Six hundred
points!" he yelled, jabbing his thumb downward.

President Bush and a host of leading congressional figures had implored the lawmakers to pass the legislation despite howls of protest from their constituents back home. Not enough members were willing to
take the political risk just five weeks before an election.

"No" votes came from both the Democratic and Republican sides
of the aisle. More than two-thirds of Republicans and 40 percent of
Democrats opposed the bill.

The overriding question for congressional leaders was what to do
next.

Congress has been trying to adjourn so that its members can
go out and campaign. "We are ready to continue to work on this,"
said Rep. Barney Frank, D-Mass., chairman of the House Financial
Services Committee.

"The legislation may have failed; the crisis is still with
us," said House Speaker Nancy Pelosi, D-Calif., in a news
conference after the defeat.

"What happened today cannot stand," Pelosi said. "We must
move forward, and I hope that the markets will take that message."

At the White House, President Bush said, "I'm disappointed in the vote.
... We've put forth a plan that was big because we've got a big
problem." He pledged to keep pressing for a measure that Congress
would pass.

Republicans blamed Pelosi's scathing speech near the close of
the debate - which attacked Bush's economic policies and a
"right-wing ideology of anything goes, no supervision, no
discipline, no regulation" of financial markets - for the vote's
failure.

"We could have gotten there today had it not been for the
partisan speech that the speaker gave on the floor of the House,"
Minority Leader John Boehner said. Pelosi's words, the Ohio
Republican said, "poisoned our conference, caused a number of
members that we thought we could get, to go south."

Rep. Roy Blunt, R-Mo., the whip, estimated that Pelosi's speech
changed the minds of a dozen Republicans who might otherwise have
supported the plan.

Frank said that was a remarkable accusation by Republicans
against Republicans: "Because somebody hurt their feelings, they
decided to punish the country."

The presidential candidates kept close track - from afar.

In Colorado, Democrat Barack Obama said, "Democrats,
Republicans, step up to the plate, get it done."

Republican John McCain spoke with Treasury Secretary Henry
Paulson and Federal Reserve Chairman Ben Bernanke before leaving
Ohio for a campaign stop in Iowa, a spokeswoman said.

Monday's action had been preceded by unusually aggressive White
House lobbying, and Fratto said that Bush had been making calls to
lawmakers until shortly before the vote.

President Bush and his economic advisers, as well as congressional leaders in both parties had argued the plan was vital to insulating
ordinary Americans from the effects of Wall Street's bad bets. The
version that was up for vote Monday was the product of marathon
closed-door negotiations on Capitol Hill over the weekend.

"We're all worried about losing our jobs," Rep. Paul Ryan,
R-Wis., declared in an impassioned speech in support of the bill
before the vote. "Most of us say, 'I want this thing to pass, but
I want you to vote for it - not me.' "

With their dire warnings of impending economic doom and their
sweeping request for unprecedented sums of money and authority to
bail out cash-starved financial firms, Bush and his economic chiefs
have focused the attention of world markets on Congress, Ryan
added.

"We're in this moment, and if we fail to do the right thing,
Heaven help us," he said.

The legislation the administration promoted would have allowed
the government to buy bad mortgages and other rotten assets held by
troubled banks and financial institutions. Getting those debts off
their books should bolster those companies' balance sheets, making
them more inclined to lend and easing one of the biggest choke
points in the credit crisis. If the plan worked, the thinking went,
it would help lift a major weight off the national economy that is
already sputtering.

More than a repudiation of Democrats, Frank said, Republicans'
refusal to vote for the bailout was a rejection of their own
president.

(Copyright 2008 by The Associated Press. All Rights Reserved.)


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