By Julie Hirschfield Davis
Associated Press Writer
WASHINGTON ó In a stunning vote that shocked the capital and worldwide markets, the House on Monday defeated a $700 billion emergency rescue for the nationís 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 even before the 228-205 vote to reject the bill was officially announced on the House floor.
As a digital screen in the House chamber recorded a cascade of ěnoî votes against the bailout, Democratic Rep. Joe Crowley of New York shouted news of the falling Dow Jones industrials. ěSix hundred points!î he yelled, jabbing his thumb downward. The decline was about 530 points shortly before the close of the trading day.
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.
ěNoî 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. ěWe are ready to continue to work on this,î said Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee.
ěThe legislation may have failed; the crisis is still with us,î said House Speaker Nancy Pelosi, D-Calif., in a news conference after the defeat.
ěWhat happened today cannot stand,î Pelosi said. ěWe must move forward, and I hope that the markets will take that message.î
At the White House, Bush said, ěIím disappointed in the vote by the United Sates Congress on the economic recovery plan.î
The president was to meet with members of his economic team later in the day ěto determine next steps,î said spokesman Tony Fratto.
Republicans blamed Pelosiís scathing speech near the close of the debate ó which attacked Bushís economic policies and a ěright-wing ideology of anything goes, no supervision, no discipline, no regulationî of financial markets ó for the voteís failure.
ěWe could have gotten there today had it not been for the partisan speech that the speaker gave on the floor of the House,î Minority Leader John Boehner said. Pelosiís words, the Ohio Republican said, ěpoisoned our conference, caused a number of members that we thought we could get, to go south.î
Rep. Roy Blunt, R-Mo., the whip, estimated that Pelosiís 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: ěBecause somebody hurt their feelings, they decided to punish the country.î
Mondayís 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.
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 Streetís bad bets. The version that was up for vote Monday was the product of marathon closed-door negotiations on Capitol Hill over the weekend.
ěWeíre all worried about losing our jobs,î Rep. Paul Ryan, R-Wis., declared in an impassioned speech in support of the bill before the vote. ěMost of us say, íI want this thing to pass, but I want you to vote for it ó not me.í ě
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.
ěWeíre in this moment, and if we fail to do the right thing, Heaven help us,î 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 companiesí 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, Republicansí refusal to vote for the bailout was a rejection of their own president.