McClatchy Washington Bureau
Posted on Mon, Sep. 29, 2008
House rejects bailout bill; what will happen next is unclear
Kevin G. Hall | McClatchy Newspapers
last updated: September 29, 2008 04:05:15 PM
WASHINGTON — The $700 billion bailout of the financial industry failed to win approval in the House of Representatives on Monday, sending stocks sharply downward and Washington into turmoil as Republicans and Democrats sought to blame another for the defeat.
"The legislation has failed, the crisis is still with us," House Sepaker Nancy Pelosi said, adding that she had spoken by phone to Treasury Secretary HenryPaulson. "I said, 'Mr. Secretary we delivered on our side of the bargain.' "
But it was not just Republicans who voted against the bill. The tally was 228 to 205, with 95 Democrats joining 133 Republicans voting against the package, which had been cobbled together during days of late-night negotiations. The leadership of each party consented to keep the vote open while they tried to twist arms in a failed effort to win a majority.
The Dow Jones Industrial Average fell by as much as 705 points during the wait. It recovered after the result was clear, but then continued to drop and was off more than 600 points after the vote.
The result was both a surprise, and yet not unexpected. The White House was confident that enough Republicans would support the controversial bill, which had won public support from key leaders.
But the bill also put representatives squarely at odds with their constituents, who'd flooded their offices in recent days with expressions of contempt for the proposed bailout, despite warnings from Paulson and Federal Reserve Chairman Ben Bernanke that defeat of the bill could touch off a credit crisis and trigger a major recession.
The coming days will tell whether it was rhetoric or reality. If credit markets seize up, consumers will face difficulty getting loans to buy cars, send their kids to college or even use their credit cards. Bill Gross, the chief investment officer of Pacific Investment Management Company, the world’s largest bond fund, warned on CNBC television that "a freeze of significant proportions" would soon unfold.
"We put forth a plan that was big because we have a big problem," President Bush said after the vote. "Our stategy is to continue to address this economic situation head on and we will be working to develop a strategy that will enable us to move forward."
House Republican leaders blamed Pelosi for increasing the partisan tenor of the vote. Rep. Roy Blunt, R-Mo., said he believed that a speech Pelosi gave angered a dozen Republicans who intended to vote for the bill. "They were there reluctantly, and it didn't take much to turn them off," Blunt said.
House Minority Leader John Boehner of Ohio said he would reach out to the Democrats in hopes of reaching another compromise bill.
Speaking on the floor after Pelosi but before the vote, Boehner made no mention of any partisanship and said, "This is a vote that separates the men from the boys and the girls from the women."
In fact, rank and file lawmakers did not blame Pelosi but the overwhelming email and phone calls from angry constituents.
"Too many people had too many problems with it," said Rep. Sue Myrick, R-N.C. "They were very uncomfortable."
Added Rep. Gene Taylor, R-Texas, "If there was a button that said 'Hell, no,' I'd push it."
The lead up to the vote was full of presidential campaign theatrics. Republican John McCain late last week said he'd suspend his campaign to get a positive vote, and his surrogates said they'd been twisting arms all weekend. His running mate Sarah Palin welcomed Sunday's compromise legislation saying that “John McCain's voice was heard."
Democrat Barack Obama expressed disappointment and urged that Congress reconsider the deal. "Step up to the plate," he said, addressing Congress. "Get it done."