House rejects financial bailout planPosted: Updated:
In a stunning vote that shocked the capital and worldwide markets, the House on Monday defeated a $700 billion emergency rescue for the nation's financial system, ignoring urgent warnings from President Bush and congressional leaders of both parties that the economy could nosedive without it. The Dow Jones industrials plunged nearly 800 points, the most ever for a single day. It closed down 777.68.
Both of Southern Arizona's Congressional members voted no, bucking their party leadership. In fact, all eight Members of Congress (four Democrats, four Republicans) from Arizona voted no.
Democratic and Republican leaders alike pledged to try again, though the Democrats said GOP lawmakers needed to provide more votes. Bush huddled with his economic advisers about a next step. The House was to reconvene on Thursday instead of adjourning for the year as planned.
The stock plunge began even before the 228-205 vote to reject the bill was officially announced on the House floor. The decline for the day surpassed the 721-point previous record, on the day after the Sept. 11, 2001, terror attacks, though in percentage terms it was well short of the drops on Black Monday of October 1987 and at the start of the Depression.
In the House chamber, as a digital screen recorded a cascade of "no" votes against the bailout, Democratic Rep. Joe Crowley of New York shouted news of the falling stocks. "Six hundred points!" he yelled, jabbing his thumb downward.
Bush and a host of leading congressional figures had implored the lawmakers to pass the legislation despite howls of protest from their constituents back home. Not enough members were willing to take the political risk just five weeks before an election.
"No" votes came from both the Democratic and Republican sides of the aisle. More than two-thirds of Republicans and 40 percent of Democrats opposed the bill.
The overriding question for congressional leaders was what to do next. Congress has been trying to adjourn so that its members can go out and campaign. "We are ready to continue to work on this," said Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee.
"The legislation may have failed; the crisis is still with us," said House Speaker Nancy Pelosi, D-Calif., in a news conference after the defeat.
Shortly after the vote, Grijalva issued a statement saying, "This crisis felt by Wall Street is the bubble hitting the top. The crisis of losing finances, homes and having to brunt poor investment decisions by the Bush Administration has been felt in our neighborhoods, jobs and homes for the past 8 years. I look forward to working on a different piece of legislation that confronts the crisis on Wall Street and provides real protections for taxpayers and homeowners. Congress should be prepared to work during the recess to do this right."
Grijalva also said, "I am not in disagreement that there is a finacial crisis in our country. I am disagreement of a proposal that is rush and more importantly does not advocate equally for main street and strong protections for working families.
Late Monday afternoon, Congresswoman Giffords issued a written statement. She said, "The Bush Administration's request for an unrestricted and unfettered $700 billion bailout for Wall Street was complete unacceptable. After days of bipartisan negotiations, a more responsible proposal emerged late Sunday night when the Emergency Economic Stabilization Act was released. It was rushed to the House floor Monday morning. As the most expensive economic program in the history of the country, I believe Congress needs to take more time to fully consider the implications of such legislation. I am concerned that this bill did not have adequate taxpayer protections to ensure a fair, long-term return on our investments. The bill also lacked strong enough restrictions on executive compensation. This week, Democrats and Republicans must keep working together, put election year politics aside, and develop smart solutions to both short term and long term problems in our financial markets and economy."