Finanical Industry Trends

The House on Monday defeated a $700 billion bailout for the nation's

financial system, and the Dow Jones industrials plunged the most ever for a

single day.

By JULIE HIRSCHFELD DAVIS , Associated Press

Last update: September 29, 2008 - 3:29 PM

WASHINGTON - 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.

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.