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House Defeats Wall Street Bailout Bill

Washington DC. Monday, September 29, 2008. Stocks spiraled downward as much as 685 points on Monday as a $700 billion bailout of Wall Street ended in defeat in the House of Representatives.

House leaders held open the vote as they tried to sway reluctant lawmakers to support the plan, which failed 205-228. Arm-twisting continued even after the vote clock expired. One member, retiring Republican Rep. Jerry Weller, did not vote.

The bill aimed to open up clogged credit lines for financial markets that had come to a near collapse. Sellers continued to shed stocks as the market teetered down more than 450 points after the vote ended.

Representatives worked throughout the weekend to make a bill palatable. Republicans had insisted on a mortgage securities insurance paid by firms who had invested in bad housing loans.

But many lawmakers continued to oppose the plan for a variety of reasons, including the massive price tag that would expand the national debt, and GOP members said constituents were calling 10-1 in opposition to the bill, which had been described as too much government intervention. Of 235 Democrats, 141 supported the legislation, representing only the 60 % of approval. Of 199 Republicans, 132 opposed it, representing the 34 % of approval only. The total percent of approval in the House was only 47% means that more than the half of the camera disapproved the bill.

President Bush argued that jittery U.S. taxpayers will benefit from a number of safeguards that lawmakers wrote into the pending legislation during weekend negotiations on Capitol Hill, including checks and balances on the operation of the program.

But supporters even Republicans said they didn't like the bailout but didn't want to play with history or risk an economic collapse.

"I'm not willing to put that bullet in the revolver and spin it. I will take the political risk," said Rep. Spencer Bachus, R-Ala., the ranking member of the House Financial Services Committee.

Opponents said part of the reason for the opposition from Republicans was what they termed a partisan speech by House Speaker Nancy Pelosi, said one GOP source.

"Pelosi's partisan speech has caused our members to go berserk and may cost us any remaining chance to pass the bill," the source said.

Pelosi had said that Congress needed to pass the bill, even though it was an outgrowth of the "failed economic policies" of the last eight years.

"When was the last time someone asked you for $700 billion?" she asked. "It is a number that is staggering, but tells us only 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."

Earlier in the day, Bush used a four-minute speech at the White House to try to assure Americans that the plan is good for the country.

"I'm confident that this rescue plan along with other measures taken by the Treasury Department and the Federal Reserve will begin to restore strength and stability to America's financial system and overall economy," Bush said. "And I'm confident in that in long run, America will overcome these challenges and remain the most dynamic and productive economy in the world."

The president spoke shortly after two leading players in the Hill bargaining went on television news shows to urge passage, even as both acknowledged the necessity of this action represents a sad day for the nation.

Asked if the compromise bill indeed will go through Congress, Sen. Chris Dodd, D-Conn., replied: "We hope so."

But the Connecticut senator, chairman of the Banking Committee, also said the bill is not a panacea for all the problems that have bedeviled the U.S. financial markets. He also said, though, that failure to act would spread the contagion of frozen credit markets even further. "This is not just about Wall Street," Dodd said. He said that it's "potentially going to hurt other people across the country."

Sen. Judd Gregg, R-N.H., who represented fellow Republicans in the weekend talks, called it a "tourniquet" for the ailing financial industry and slow-moving economy.

The latest assessments of prospects for passage came as investors worldwide and in early trading in the United States continued to show doubt about whether the bill would go through, much less go a long way toward curing the systemic problems that have unnerved financial markets across the globe for weeks.

Bush said the legislation addresses the root cause of the problem "assets related to home mortgages that have lost value during the housing decline."

And the president noted that under provisions of the pending bill, "the federal government will be authorized to purchase these assets" and said that will help financial institutions to resume lending to individuals and businesses.

"I know many Americans are worried about the cost of the bill," Bush said. But he also said the nonpartisan Congressional Budget Office and the federal Office of Management and Budget expect that the "ultimate cost to the taxpayer" will be much less.


Source: Foxnews.com