WASHINGTON - (AP) - The House on Monday defeated a $700 billionemergency rescue for the nation's financial system, ignoring urgentwarnings from President Bush and congressional leaders of bothparties that the economy could nosedive into recession without it.
Stocks plummeted on Wall Street even before the 228-205 vote toreject the bill was announced on the House floor.
Bush and a host of leading congressional figures had imploredthe lawmakers to pass the legislation despite howls of protest fromtheir constituents back home. Despite pressure from supporters, notenough members were willing to take the political risk just fiveweeks before an election.
Ample no votes came from both the Democratic and Republicansides of the aisle. More than two-thirds of Republicans and 40percent of Democrats opposed the bill.
The overriding question for congressional leaders was what to donext. Congress has been trying to adjourn so that its members cango out and campaign. And with only five weeks left until ElectionDay, there was no clear indication of whether the leadership wouldkeep them in Washington. Leaders were huddling after the vote tofigure out their next steps.
A White House spokesman said that President Bush was "verydisappointed."
"There's no question that the country is facing a difficultcrisis that needs to be addressed," Tony Fratto told reporters. Hesaid the president will be meeting with members of his team laterin the day "to determine next steps."
"Obviously we are very disappointed in this outcome," Frattosaid. "There's no question that the country is facing a difficultcrisis that needs to be addressed. The president will be meetingwith his team this afternoon to determine the next steps and willalso be in touch with congressional leaders."
Monday's mind-numbing vote had been preceded by unusuallyaggressive White House lobbying, and Fratto said that Bush had useda "call list" of people he wanted to persuade to vote yes as lateas a short time before the vote.
Lawmakers shouted news of the plummeting Dow Jones average aslawmakers crowded on the House floor during the drawn-out and tensecall of the roll, which dragged on for roughly 40 minutes asleaders on both sides scrambled to corral enough of theirrank-and-file members to support the deeply unpopular measure.
They found only two.
Bush and his economic advisers, as well as congressional leadersin both parties had argued the plan was vital to insulatingordinary Americans from the effects of Wall Street's bad bets. Theversion that was up for vote Monday was the product of marathonclosed-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 billbefore the vote. "Most of us say, 'I want this thing to pass, butI want you to vote for it - not me.' "
With their dire warnings of impending economic doom and theirsweeping request for unprecedented sums of money and authority tobail out cash-starved financial firms, Bush and his economic chiefshave focused the attention of world markets on Congress, Ryanadded.
"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 allowedthe government to buy bad mortgages and other rotten assets held bytroubled banks and financial institutions. Getting those debts offtheir books should bolster those companies' balance sheets, makingthem more inclined to lend and easing one of the biggest chokepoints in the credit crisis. If the plan worked, the thinking went,it would help lift a major weight off the national economy that isalready sputtering.
The fear in the financial markets send the Dow Jones industrialscascading down by over 700 points at one juncture. As the vote wasshown on TV, stocks plunged and investors fled to the safety of thecredit markets, worrying that the financial system would keepsinking under the weight of failed mortgage debt.
"As I said on the floor, this is a bipartisan responsibilityand we think (Democrats) met our responsibility," said HouseMajority Leader Steny Hoyer, D-Md.
Asked whether majority Democrats would try to reverse thestunning defeat, Hoyer said, "We're certainly not going to abandonour responsibility. We'll continue to focus on this and see whatactions we can take."
Several Republican aides said House Speaker Nancy Pelosi,D-Calif., had torpedoed any spirit of bipartisanship thatsurrounded the bill with her scathing speech near the close of thedebate that blamed Bush's policies for the economic turmoil.
Without mentioning her by name, Rep. Adam Putnam, R-Fla., No. 3Republican, said: "The partisan tone at the end of the debatetoday I think did impact the votes on our side."
Putnam said lawmakers were working "to garner the necessaryvotes to avoid a financial collapse."
But the defeat was already causing a brutal round offinger-pointing.
"We could have gotten there today had it not been for thepartisan speech that the speaker gave on the floor of the House,"House Minority Leader John Boehner said. Pelosi's words, the OhioRepublican said, "poisoned our conference, caused a number ofmembers that we thought we could get, to go south."
Rep. Roy Blunt, R-Mo., the whip, estimated that Pelosi's speechchanged the minds of a dozen Republicans who might otherwise havesupported the plan.
Rep. Barney Frank, D-Mass., scoffed at the explanation.
"Well if that stopped people from voting, then shame on them,"he said. "If people's feelings were hurt because of a speech andthat led them to vote differently than what they thought thenational interest (requires), then they really don't belong here.They're not tough enough."
More than a repudiation of Democrats, Frank said, Republicans'refusal to vote for the bailout was a rejection of their ownpresident.
"The Republicans don't trust the administration," he said."It's a Republican revolt against George Bush and John McCain."
In her speech, Pelosi had assailed Bush and his administrationfor reckless economic policies.
"They claim to be free market advocates when it's really ananything-goes mentality: No regulation, no supervision, nodiscipline. And if you fail, you will have a golden parachute andthe taxpayer will bail you out. Those days are over. The party isover," Pelosi said.
"Democrats believe in a free market," she said. "But in thiscase, in its unbridled form, as encouraged, supported, by theRepublicans - some in the Republican Party, not all - it hascreated not jobs, not capital. It has created chaos."