Bailout Plan Rejected by Congress

By Richard Simon and James Gerstenzang
LA Times

The House today rejected a $700-billion Wall Street bailout that would have been the biggest government intervention in the financial system since the Great Depression, sending the stock market into a sharp downturn and leaving President Bush’s plan to bailout the economy in doubt.

The vote was 205 in favor of the measure and 228 against. The Dow Jones industrial average fell about 500 points in early afternoon trading on the East Coast.

The result was a stunning setback for the president, who spent much of the morning — along with Vice President Dick Cheney and Treasury Secretary Henry M. Paulson Jr. — on the telephone trying to line up sufficient Republican support to win passage.

Republicans voted against the Bush plan by a margin of about 2 to 1. Democrats gave it strong support.

It was a politically excruciating vote for lawmakers, whose offices have been flooded with calls and e-mails overwhelmingly in opposition to the measure, and it divided lawmakers from the same party.

“This is probably the toughest vote any of us has taken since we’ve been in Congress,” said Rep. Gary Miller (R-Diamond Bar).

“While this is not 1929 all over again, it could be,” said Rep. Christopher Shays (R-Conn.), who voted for the measure, even though he’s in a tough race.

“We can’t let the foolishness and greed on Wall Street bring down Main Street,” he added. “At least I don’t intend to.”

Democrats who control Congress balked at supporting the measure until they were assured a large number of Republicans would join them.

But only approximately one-third of the House Republicans ended up supporting the bill.