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House rejects $700B bailout plan

By David R. Sands and Sean Lengell | Monday, September 29, 2008

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The House of Representatives Monday rejected a proposed $700 billion Wall Street rescue package, scrambling world financial markets and dealing a stunning rebuke to the Bush administration and their own party leaders who pleaded for passage of the unpopular bailout package.

The 228-206 vote leaves the package facing an uncertain future, amid dire warnings from Treasury Secretary Henry M. Paulson Jr. and many private analysts that the U.S. credit markets may seize up if the government refuses to act.

But dozens of conservative Republicans and liberal Democrats bucked their leadership on the final vote, ignoring desperate pleas from their leaders to reconsider. House leaders held the 15-minute vote open for nearly 40 minutes, roaming the packed House floor in a futile bid to pressure members to change their vote.

"I'm disappointed in the vote by the United Sates Congress on the economic recovery plan," Mr. Bush said after a meeting at the White House with Ukrainian President Victor Yuschenko. "Our strategy is to continue to address this economic situation head on. We'll be working to develop a strategy."

Leading U.S. stock indexes fell sharply as it became apparent that the measure was going down to defeat. The Dow Jones index of industrial stocks was down nearly 600 points shortly before the closing bell.

Both Republican presidential nominee Sen. John McCain and Democratic rival Sen. Barack Obama had urged passage of the bailout package, with Mr. McCain taking a highly public role in the effort to draft a compromise bill that skeptical Republicans could support.

Congressional leaders were still trying to figure their next steps, with lawmakers anxious to adjourn with just over a month until Election Day. The Senate had planned to vote on the package Wednesday evening, on the assumption it would pass the House.

House Democratic leaders said they were exploring that possibility of a second vote, either with the same bill or a slightly modified one, particularly if world markets continue to sag.

After the vote, House Minority Leader John A. Boehner and other Republican leaders were incensed at what they called a highly partisan speech by House Speaker Nancy Pelosi during the debate. While other Democratic leaders acknowledged the difficult vote and praised Republicans who worked for a compromise, the California Democrat said the bailout was only part of the cost of failed Bush administration economic policies.

"Those days are over. The party is over," Mrs. Pelosi said.