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
"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
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
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
"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.