The House, in a vote that shook the government, Wall Street and markets all over the world, has defeated a $700 billion emergency bailout for the nation's financial system. Shocked and disappointed investors sent the Dow Jones industrials plunging 777 points, the most ever for a single day.
In the face of thousands or even for millions of e-mails and phone calls fiercely bucking the measure, many lawmakers were not willing to take the political risk of voting for it just five weeks before the elections. The bill went down, 228-205. The House website was overwhelmed as millions of people sought information about the measure through the day.
According to the White House, senate leaders showed no tendency to try to bring the measure to a vote before they could determine its fate in the House. Meanwhile, President Bush was scheduled to bring a statement on the bailout plan Tuesday morning. Moreover, all sides agreed the attempt to bolster beleaguered financial markets, potentially the biggest government intervention since the Great Depression, could not be abandoned.
Nevertheless, in a surprising display on Monday, a majority of House members slapped aside the best scenario of the government had been able to come up with, opposing presidential speeches, pleading visits from Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke and urgent warnings that the economy could suddenly drop without the legislation.
The legislation the administration promoted would have permitted the government to acquire bad mortgages and other toxic assets held by troubled banks and other failed financial institutions. Getting those debts off their books should bolster those firms' balance sheets, making them more reluctant to lend and ease one of the largest choke points in a national credit collapse. If the bailout plan worked, the thinking went; it would help lift a major weight off the national economy, which is already endangered.
Hoping to pick up enough Grand Old Party (the Republican political party in the United States) votes for the next try, Republicans floated several suggestions. One would double the $100,000 ceiling on federal deposit insurance. Another would end rules that depend on companies to devalue assets on their books to show objectively the price they could get in the market.
As a digital screen in the House chamber recorded a cascade of "no" votes against the rescue plan, Democratic Rep. Joe Crowley of New York shouted news of the falling Dow Jones industrials. "Six hundred points!" he yelled, jabbing his thumb downward. In addition, the final stock carnage far surpassed the 684-point drop on the first trading day after the Sept. 11, 2001, terror attacks.
In the House, "no" votes came from both the Republican and Democratic sides of the aisle. More than two-thirds of Republicans and 40% of Democrats rejected the bill. Several Democrats in close election fights waited until the last moment, then went against the bill as it became clear the vast majority of Republicans were rejecting it.
Related post: White House and Congress Reached Financial Rescue Deal
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