House Rejects Wall Street Bailout

Posted September 29, 2008 at 1:36pm

Updated: 3:15 p.m.

The House voted 228-205 on Monday to reject the financial sector bailout, sending stocks into a free fall and dealing the Bush administration a devastating defeat.

Leaders held the vote open as they leaned on rank-and-file Members but failed to change votes. Members appeared to be looking for a strategy to bring up the bill again, though the details were uncertain. Democrats said the GOP had to deliver more votes.

Several Democratic leadership staffers said there would not be another vote today.

Democratic leaders secured 140 votes for the bailout, which was in the ballpark of what they were predicting. But Republican leaders dug up only 65 votes, far short of the 100 votes they were seeking.

President Bush and Treasury Secretary Henry Paulson had lobbied for the $700 billion package and warned of economic peril if it failed.

The bill was crafted over the weekend by a bipartisan group of House and Senate negotiators. Speaker Nancy Pelosi (D-Calif.), Majority Leader Steny Hoyer (D-Md.) and Minority Leader John Boehner (R-Ohio) all had urged Members to support the bill.

After the vote, Boehner and others blamed Pelosi for what they called a partisan speech. Boehner said Pelosi’s remarks caused his Members to “go south” from their planned support. Democrats dismissed that explanation and said the GOP leadership could not corral even a third of its Members.

“We delivered on our side,” Pelosi said after the vote, adding that the issue was not over.

“The process is still with us,” she said.

The bill was opposed from the left and the right, as well as by vulnerable lawmakers who noted the public opposition to it.

Conservative Republicans opposed a massive government rescue of financial institutions and sought other plans. Progressives were unhappy with its lack of foreclosure provisions and with handing over hundreds of billions of dollars to the Bush administration.

Party leaders asked lawmakers to hold their noses and pass the bill in the name of averting a Wall Street meltdown.

“You want to go home, so I’m not going to list all of my concerns that I have with it,” Pelosi said.

Pelosi blasted the administration for waiting until the last minute to demand $700 billion and “czar-like powers” to stem a Wall Street crisis that crept up “so silently, almost on little cat’s feet.”

The administration’s original proposal was “almost arrogant and insulting,” said Pelosi, who pinned the meltdown squarely on the president’s “failed economic policies.”

Boehner made a last-minute plea to Members to support to the bill, saying shortly before the vote that the likelihood of it passing was “in serious doubt.”

“Nobody wants to vote for this. Nobody wants to be around it,” Boehner said. “But we have a product that may work if we can get the votes to pass it, which I don’t have to tell any of you is in serious doubt.”

Boehner, who enlisted other GOP leaders to support the bill, called the proposal is a “mud sandwich.”

“These are the votes that separate the men from the boys and the girls from the women,” Boehner said. “These are the kind of votes that we have to look into our souls and ask, ‘What is in the best interest of our country?’”

Even Financial Services ranking member Spencer Bachus (R-Ala.), a bill skeptic, said he would vote for the bill because he was not willing to put peoples’ pensions and college funds at risk.

“I’m not willing to put that bullet in the revolver and spin it. I’m not willing to take that gamble,” he said.

Asked about the next step, Financial Services Chairman Barney Frank (D-Mass.) said it would be up to those who opposed the bill.