Wall Street

Trader Michael Kilkenny, right, sits at a post after the close of trading Monday afternoon. Wall Street’s worst fears came to pass Monday, when the government’s financial bailout plan failed in Congress and stocks plunged precipitously, hurtling the Dow Jones industrials down 777.68, or 6.98 percent to 10,365.45, in their largest one-day point drop ever.

Richard Drew The Associated Press
AdaEveningNews.com - Ada, Oklahoma

(AP) — 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.

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.

Stocks began falling even before the 228-205 vote to reject the bill was officially announced on the House floor. The 777-point decline for the day surpassed the 684-point drop on the first trading day after the Sept. 11, 2001, terror attacks.

Treasury Secretary Henry Paulson looked grim afterward, if not shaken. “We need to work as quickly as possible,” he said. “We need to get something done.” He went on: “We need to put something back together that works.” Looking to inject a note of confidence into a day of high anxiety, he offered: “Our banking system has been holding up very well, considering all of the pressures.”

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 loud protest from their constituents back home. Not enough members were willing to take the political risk just five weeks before an election.

More than two-thirds of Republicans and 40 percent of Democrats opposed the bill. In all, 95 Republicans joined 140 Democrats in voting “yes,” while 133 Republicans and 65 Democrats voted “no.”

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 for the election that is just five weeks away.

“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.

“What happened today cannot stand,” Pelosi said. “We must move forward, and I hope that the markets will take that message.”

At the White House, Bush said, “I’m disappointed in the vote. ... We’ve put forth a plan that was big because we’ve got a big problem.” He pledged to keep pressing for a measure that Congress would pass.

Republicans blamed Pelosi’s scathing speech near the close of the debate — which attacked Bush’s economic policies and a “right-wing ideology of anything goes, no supervision, no discipline, no regulation” of financial markets — for the vote’s failure.

“We could have gotten there today had it not been for the partisan speech that the speaker gave on the floor of the House,” Minority Leader John Boehner said. Pelosi’s words, the Ohio Republican said, “poisoned our conference, caused a number of members that we thought we could get, to go south.”

Rep. Roy Blunt, R-Mo., the whip, estimated that Pelosi’s speech changed the minds of a dozen Republicans who might otherwise have supported the plan.

That was a remarkable accusation by Republicans against Republicans, said Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee: “Because somebody hurt their feelings, they decided to punish the country.”

The presidential candidates kept close track — from afar.

In Colorado, Democrat Barack Obama said, “Democrats, Republicans, step up to the plate, get it done.”

Republican John McCain spoke with Paulson and Federal Reserve Chairman Ben Bernanke before leaving Ohio for a campaign stop in Iowa, a spokeswoman said.

The legislation the administration promoted would have allowed the government to buy bad mortgages and other rotten assets held by troubled banks and financial institutions. Getting those debts off their books should bolster those companies’ balance sheets, making them more inclined to lend and easing one of the biggest choke points in the credit crisis. If the plan worked, the thinking went, it would help lift a major weight off the national economy that is already sputtering.

Monday’s action had been preceded by unusually aggressive White House lobbying, and Fratto said that Bush had been making calls to lawmakers until shortly before the vote.

U.S. Congressman Tom Cole (R), Oklahoma, said he is disappointed Congress couldn’t come together and pass this bipartisan compromise given the serious economic challenges Americans are facing.

“The fact that the current President and both our major party presidential nominees were in favor of this legislation indicates the gravity of the situation ahead of us,” Cole said. “In my opinion gridlock and inaction were not legitimate options.

“Our nation is facing the most challenging economic times since the Great Depression,” he continued. “In recent days we have seen some of America’s largest and most storied financial institutions fail. And while the problems may have originated on Wall Street, the devastating impacts of these problems are beginning to be felt on Main Street.

“Personally, this is the toughest vote that I have ever cast, but I am convinced that it was the right thing to do for America and for the people I’m privileged to represent. I did not live through the Great Depression, but my parents and grandparents did. And, having lived through the tough times of the 1980s, sparked by bank failures and a real estate bust, I want to do all I can to see that our own children are spared such trials and hardships. I believe history will show that support for this bipartisan compromise was a tough vote, but the right vote.”

On a local level, Vision Bank CEO Jim Hamby said the banking system in Ada will be Okay.

“Locally we’re blessed,” Hamby said. “The local economy is in good shape. Over the short term, the local economy won’t feel this very much other than in retirement plans and that sort of thing. Over the long haul no one is immune from recession. We shouldn’t feel it as bad as most, but we will feel it.

“This is a financial crisis, but we’re blessed that the Oklahoma banks, right here, are all very sound and very well capitalized. They don’t have bad mortgages on their books and they’re in great shape to weather the storm, so (residents) don’t need to worry about their local banks.”

Hamby said it is important that congress gets back together and gets the bill passed.

“It is so critical to the country. I know it’s unpopular, but it is critical to every man and woman in this country that that bill passes.”