Washington, Sep 30 (IANS) In a stunning blow to President George Bush, the US House of Representatives rejected a $700 billion financial rescue plan, sending the markets in a tizzy and Congressional leadership scrambling to save the day.
The fate of the historic rescue plan hammered out after days of negotiations by the Bush administration and the leadership of both Republican and Democratic parties to prevent a widespread financial collapse was left hanging in the balance by the shock defeat.
As it became apparent that the plan to give the government power to purchase up to $700 billion in the troubled assets that are at the heart of the US financial crisis was heading to defeat, stock markets took a steep dive.
The Dow Jones industrial average closed down 777.68 points, recording a fall of nearly 7 percent and its largest closing point drop in history. The Standard & Poor's 500-stock index and the tech-heavy Nasdaq each lost about 9 percent.
US Treasury Secretary Henry M. Paulson, the orignal architect of the rescue package, said after a meeting with Bush at the White House that he was 'very disappointed' in today's vote but that he was committed to working out a solution with Congress.
'We've got much work to do, and this is much too important to simply let fail,' he said. 'We need to put something back together that works.' He said the rescue plan he put forward 'is a plan that works.'
Bush also expressed disappointment. 'We'll be working with ... leaders of Congress on the way forward,' he said. 'Our strategy is to continue to address this economic situation head on.'
Republican and Democratic House leaders later blamed the defeat of the bill on each other but vowed to continue working to produce legislation that could pass Congress.
'We are ready to continue working on this,' House Financial Services Committee Democratic Chairman Barney Frank, said shortly after the shock vote. House Republican leader John Boehner said lawmakers 'have no choice, in my view, but to try to work together to find a solution.'
Leaders in both parties said negotiations could result in a new vote, but it was unclear whether that would be a new version of the legislation.
The House is out of session for the next two days to observe the Jewish holiday of Rosh Hashanah. But the Senate, which was earlier planning to meet Wednesday to vote on the rescue plan, would sit Tuesday to finish other pending legislation.
Republican leaders put the onus on Speaker Nancy Pelosi, saying that she failed to bring on board 95 fellow Democrats who voted against the bill and charging that a 'partisan' speech she delivered at the end of today's debate turned off many Republicans.
Boehner charged that the bill could have passed Monday 'had it not been for the partisan speech that the speaker gave on the floor of the House.' He said her remarks 'poisoned our conference' after some wary conservatives were already on the House floor.
Urging support for the bill, Pelosi had denounced the $700 billion price tag as 'the costs of the Bush administration's failed economic policies - policies built on budgetary recklessness, on an anything-goes mentality, with no regulation, no supervision, and no discipline in the system.'
Pelosi maintained that Democrats 'delivered on our side of the bargain' by getting 60 percent of House Democrats to support a bill that was built around the Bush administration's proposal, whereas 67 percent of House Republicans voted against it.
'The legislation has failed; the crisis has not gone away,' she said. 'We must work in a bipartisan way to have another bite at the apple.'
The two presidential candidates, Democrat Barack Obama, and Republican John McCain, continued to spar over the bailout plan.
'Every American should be outraged that an era of greed and irresponsibility on Wall Street and Washington has led us to this point, but now that we are here, the stability of our entire economy depends on us taking immediate action to ease this crisis,' said Obama.
But 'now is the time for Democrats and Republicans to join together and act in a way that prevents an economic catastrophe,' he said.
McCain said he had hoped the bill would pass. But, 'our leaders failed to act,' McCain said. And, he said that 'Senator Obama and his allies in Congress infused unnecessary partisanship into the process. Now is not the time to fix the blame, it's time to fix the problem.'
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