By JULIE HIRSCHFELD DAVIS
WASHINGTON
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. The Dow Jones industrials plunged nearly 800 points, the most ever for a single day.
Democratic and Republican leaders alike pledged to try again, though the Democrats said GOP lawmakers needed to provide more votes. Bush huddled with his economic advisers about a next step. The House was to reconvene on Thursday instead of adjourning for the year as planned.
Stocks began falling even before the 228-205 vote to reject the bill was officially announced on the House floor. The 777-point decline for the day surpassed the 684-point drop on the first trading day after the Sept. 11, 2001, terror attacks.
Treasury Secretary Henry Paulson looked grim afterward, if not shaken. "We need to work as quickly as possible," he said. "We need to get something done." He went on: "We need to put something back together that works." Looking to inject a note of confidence into a day of high anxiety, he offered: "Our banking system has been holding up very well, considering all of the pressures."
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.
Bush and a host of leading congressional figures had implored the lawmakers to pass the legislation despite loud protest from their constituents back home. Not enough members were willing to take the political risk just five weeks before an election.
More than two-thirds of Republicans and 40 percent of Democrats opposed the bill. In all, 65 Republicans joined 140 Democrats in voting "yes," while 133 Republicans and 95 Democrats voted "no."
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 for the election that is just five weeks away.
"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, 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.
That was a remarkable accusation by Republicans against Republicans, said Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee: "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 Paulson and Federal Reserve Chairman Ben Bernanke before leaving Ohio for a campaign stop in Iowa, a spokeswoman 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.
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.
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.'"
Said Boehner, after the vote: "Americans are angry, and so are my colleagues. They don't want to have to vote for a bill like this. But I have concerns about what this means for the American people, what it means for our economy, and what it means for people's jobs. I think that we need to renew our efforts to find a solution that Congress can support."
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thanks
I appreciate it.
cs
Good point about the Holiday
IRAQ WAR HARDLY IN A HURRY
There was debate for months prior to the war in Iraq. President Bush did not claim that if we did not invade Iraq before the week was out we'd come under attack. Secretary Powell even gave a presentation to the U.N., the Security Council of which unanimously passed a resolution warning Iraq of "serious consequences" if it did not comply unconditionally, which it did not.
The administration and the Congress have essentially warned that the whole economy would collapse if the bailout were not passed immediately (this was last week yet the lights are still on on Main Street) but Congress took off until noon on Thursday. I don't care if it's a Jewish holiday - I have spent far too many Christmases, Thanksgivings, etc on duty overseas because of a war they authorized to feel any sympathy. If circumstances are as dire as they claim they should be at work now.
dg45462
"did you not see Pelosi promoting this bailout?"
Yes I did and I think it was very bad timing, but did 12 Repubs vote NO because of it? I would hope not. I'm not trying to blame Bush, but I didn't like his approach to get the bill passed immediately, just like the way the war in Iraq was done. Not sure I'm clear on the rest of your comment.
Gertz, I'm disappointed
Just catching up on the news & exchanges and I read your counterpoint on the poll where you said, "What I would like to see is stopping the blame game and try and see what the "real" problem is and what is realistic in solving it..." so I added an Amen!
Then I read this article and see you posting this, "Bush tried to shove this through without discussion or debate, the same way he did the war in Iraq."
C'mon...
I'm a free market enterprise kinda guy who immigrated from socialistic Canada. I lean heavily towards letting the market sort itself out and keep the government out. However, if some data can show me proof that government involvement will remedy our situation, I'm willing to look at that and evaluate it. (I've yet to see any...)
I'm hoping you'll reconsider your position ... did you not see Pelosi promoting this bailout?
Not the same people
But I will repost this in case he gets hit for repeating. Why are you all angered when this stuff is brought up?
"Jim Johnson, former Fannie Mae chairman. Had to resign as head of Obama's vice presidential search team when this mess started happening.
Jamie Gorelick, rumored to be an attorney general candidate in an Obama administration, vice chairman of Fannie Mae from 1997 to 2003.
Penny Pritzker, Mr. Obama's national finance chairman, pioneered the packaging of bad loans with good ones at her now defunct Superior bank in suburban Chicago."
Obama has surrounded himself with people who are at the heart of this mess.
More of Obama's staff
"Jim Johnson, former Fannie Mae chairman. Had to resign as head of Obama's vice presidential search team when this mess started happening.
Jamie Gorelick, rumored to be an attorney general candidate in an Obama administration, vice chairman of Fannie Mae from 1997 to 2003.
Penny Pritzker, Mr. Obama's national finance chairman, pioneered the packaging of bad loans with good ones at her now defunct Superior bank in suburban Chicago."
Obama has surrounded himself with people who are at the heart of this mess.
Not the same person
Just recognized the BS and threw the flag at the same time. I will admit my mistake...Raines is just an Obama advisor. From the Washington Post 7/16/08 "The Obama Campaign Has Solicited Franklin Raines, Who “Stepped Down As Fannie Mae’s Chief Executive Under The Shadow Of A $6.3 Billion Accounting Scandal,” For “Advice On Mortgage And Housing Policy.”" Now Raines and Obama have both "said" that there is no relationship, but that is becoming a common theme with Obama and his supporting characters, isn't it? This is the fourth or fifth time now that Obama has distanced himself from relationships with persons of suspect character. McCain isn't much better in his choice of people, but at least he doesn't try and hide his relationships.
The lies continue...
(Ira and William P-are you the same person?-identical posts with two different names)
Raines is not nor never has been an Obama economic advisor.
So, do you keep bringing this up so to avoid the FACT that McCain's campaign manager Rick Davis received almost one million dollars in fees from Freddie/Fannie over the last few years and was receiving these monthly payments up to last month?
Ira, etc. about McCain's staff
So many of the comments have blamed Obama for cozying up to the FM2's, that I didn't need to repeat that over again. Just trying to set the record straight so we can see both sides. Of course, Obama has some ties also, but his campaign manager, the top dog, isn't, as far as I know. You'd think that McCain would at least attempt to find someone who wasn't a top lobbyist to run his "change" campaign.
And of course my comments are motivated by my views. Aren't yours? That seems to be the whole point of the comments: to read, challenge, educate and sometimes learn from other points of view.
Len Rothman: look at Obama and his staff first
Franklin Raines (Former head at Fannie) was paid over $100 million in bonuses from Fannie and then he and other execs were ordered pay civil fines over $31 million after it was found that fraudulent book keeping was used to artificially inflate his bonuses. He is now Obama's campaign finance manager. Obama is the second highest paid government official by lobbyists from Fannie/Freddie (Only Chris Dodd is higher). Be careful where the finger points...
Um Len
Did you purposely leave out Obama's attachement to lobbyists on accident or was it just politcally motivated?
McCain's staff is rife with former
lobbyists for both Fannie and Freddie, passing out $10's of millions to everyone. Rick Davis, his campaign manager, was a anti-regulatory lobbyist for Fannie and Freddie for 5 years, making $35K/month. It is just another example of the excesses of corporate lobbying on both sides of the aisle. But, McCain is in as deep as anyone and what makes it a bit harder to swallow is his mantra of being a "maverick". A maverick may be unbranded, but he is still a herd animal.
the undecided
Please, all of you that are undecided and have a brain should pay close attention to these proceeding. The majority of backers of this bail out at the citizen level do not understand what it means. If any one of your elected officials votes for this it is a vote of no confidence in capiilism and free market enterprise. Someone posted we should remember this day upon receiving our pink slips .That is the least of your worries. If the goverment has to prop up our economyu w/ tax dollars then our system is an illusion. The legislation opens the door for more spending and sets an irreversable precedent. We need to take our lumps now. BTW, Len and I always find some common ground. Quite the accurate statement:
"so please put the blame where it belongs: mortgage companies and investment banks, period."
Let 'em fall!
The history of this mess
In 2003 when Bush tried to regulate Fannie and Freddie: Rep. Melvyn Watt, (D-NC) Committee on Financial Institutions & Consumer Credit. stated, “I don’t see much other than weakening the bargaining power poorer families to get affordable housing.” In 2005 John McCain proposed regulation: “If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.” Both attempts defeated by Democrats in Congress.
Top Congressional leaders receiving money (from most money down) from housing lobbyists to prevent more regulation: Chris Dodd (D), Barack Obama (D), Chuck Schumer (D), Barney Frank (D). (Did you notice who the number 2 money recipient is?)
Capital Hill
I am only 29 y/o and don't have a long political memory as far as this country goes, but I have never witnessed such (political) incompetence in all of my life as I have with this Congress. FIRE THEM ALL...
The End Is Near
I sure hope everyones "Settler Skills" are up to date. We are going to need them.
plenty of blame to go around
From today's Washington Post:
"It was quite a spectacle. House Speaker Nancy Pelosi delivered a bitter floor speech in which she expressed astonishment at the bill's price tag even as she weakly urged its adoption, and in which she blamed the entire situation on President Bush and the Republicans even as she was depending on Republican votes. Rather than stifling their own reactive impulses, a dozen or so wavering Republicans, according to Minority Whip Roy Blunt (R-Mo.), used Ms. Pelosi's speech as an excuse to vote no, simultaneously scapegoating Ms. Pelosi and taking revenge on her -- at the country's expense. Democrats, in turn, denounced the Republican leadership's failure to discipline its troops. And then Congress marched out to a scheduled recess, with no clear plan for taking the bill up again." Pretty much says it all. I say a pox on both their houses.
This comment is awaiting staff approval.
Guess I've gone from being trustworthy to persona non grata by the Pilot.
Like others, I've come to expect that. Doesn't faze me though. MONTANI SEMPER LIBERI
"Living within their means" is valid when you get a home loan...
...with NO money down (on a HOME? Are you kidding me?), when you are allowed to purchase a home with a mortgage payment that equals 65% of your GROSS income (not net after taxes; and even if the income involves some sort of public assistance, such as welfare). That's what these quasi-Federal institutions were doing, and the executives of these institutions used the numbers of these loans approved to grant themselves HUGE bonuses that exceeded their annual salaries. They were ALL DEMOCRATS, by the way, and the DEMOCRATS in Congress BLOCKED efforts to stop this years ago.
"The problem with the just-defeated bill..."
That was the gist of what Bush and McCain wanted. Aren't they genuine republicans?
There was once a time
When the republican party was known for results.
Now all I see are excuses. With ever new disaster republicans whine, "It wasn't me."
But republicans and the odd collection of religious and political extremists now running the party have run out of time.
In November, all the voters will be thinking about are the results of the past eight years.
And then they will get out their elephant guns.
typical liberal condescension
Mr. Twine, just because people disagree with you does not make them tools. The problem with the just-defeated bill was that it put the taxpayer on the hook for the whole shooting match. What most of the Republicans who voted against the bill were trying to do was introduce a package that had a private sector solution to the crisis, specifically issuing loans instead of grants. I happen to agree with this approach. In addition, the bill put WAY too much power into the hands of the Treasury Secretary. In effect, he was to be given the authority to nationalize any financial institution he wanted to with NO recourse for those affected. The fed could seize your bank at will and you could not appeal to courts for redress. Sorry, but I don't want anyone to have that authority. If you do, perhaps you should move to Venezuela. Incidentally, your "despite numerical evidence to the contrary" line makes no s
Next time
Maybe if we told republicans the money would be used for another "surge" in Iraq they'd vote for it.
They seem far more willing to spend our tax dollars in Iraq than they do at home.
McCain must be going nuts. The knuckleheads on these boards might not get it, but McCain knows who voters are going to blame.
He might have to explain it to McPalin, though.
Can you hear us now?
For decades the politicians from the lowest levels of government all the way to the top of the Federal food chain have been pretty much on automatic, doing what they want with little interference from the citizenry. All that changed today. No longer will the little guys take government for granted. That trust has been broken, a result of fat cats and mangy dogs running roughshod over this country. The day of reckoning is fast approaching for the politicians, and it's clear that right or wrong the average citizen is willing to endure great sacrifice to take our country back. Now you can say this is a good bill or a bad bill, but the fact is The People no longer give a darn about Pelosi or McCain and their corrupt friends. It's become a matter of principle, not politics.
Too funny
Half the usual conservative suspects are whining that Democrats sunk the bail out bill - despite numerical evidence to the contrary - and the other half are celebrating a great republican victory.
Either way, blue collar conservatives once again show what tools they are. They haven't a clue about what really just happened, but they will feel the brunt of it very soon. Time to put a "for sale" sign on the pickup Jethro.
CS, Yes encourage loans, but not
give away the money. You would provide a sub-prime loan, at higher interest to account for the extra risk, but it should still be to people that are capable of satisfying the debt. FM2, CRA, etc. are the copouts for the critics, when, in fact, it was the mortgage lenders who fell all over themselves making fraudulant loans to get the fees, then the ratings companies like Moody's giving false ratings to CMO packages of the aforementioned fraudulant loans, then passing them on to greedy investment bankers, who knew that these packages were worthless, who sliced, diced and otherwise obfuscated these "investment vehicles" so no one could understand them, and had to rely on Moody's AAA ratings, and the cycle continues until the housing market went bust. So please put the blame where it belongs: mortgage companies and investment banks, period.
In the works for a while
From the New York Times on 30 SEP 99:
Fannie Mae is encouraging "home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans...Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people..."
"The Republicans try to warn everyone years earlier about..."
Yet the republicans did nothing while they had a majority in both Houses of Congress for over half of Bush's eight year time in office.
And now the republicans are still refusing to do anything.
For some
living within their means means no health insurance. To assert that this crisis is born from people not living within their means is a brazen simplification and generalization.