WASHINGTON - The Dow plunged 780 points Monday as the House delivered a stunning defeat on an economic rescue bill to help stave off an crisis in America's financial system.
The 228-205 vote came after congressional and administration negotiators spent the weekend coming up with a bipartisan plan they hoped would pass. But the "no" votes Monday afternoon came from both sides of the aisle. More than two-thirds of Republicans and 40 percent of Democrats opposed the bill.
The defeat means the bill is dead on arrival when it reaches the Senate, which had planned on voting on it as early as Wednesday. Lawmakers will now have to go back to the drawing board to work out their disagreements.
What would happen if Congress doesn't work out an economic rescue plan? Click play to watch the Heritage Foundation's James Gattuso, following CBN News Reporter John Jessup's report. Would the bailout plan work? Click play to hear Pat Robertson's comments, as seen on The 700 Club 11 a.m. EST.
"The legislation may have failed; the crisis is still with us," House Speaker Nancy Pelosi, D-Calif., said in a news conference following the defeat.
"What happened today cannot stand. We must move forward, and I hope that the markets will take that message," Pelosi said.
By closing, the Dow had plunged 780 points as investors worried that the financial system would keep sinking under the weight of failed mortgage debt. The plan's failure leaves the future of the financial sector in question as the credit markets remain close to frozen.
"I'm disappointed in the vote by the United Sates Congress on the economic recovery plan," Bush said. "Our strategy is to continue to address this economic situation head on. We'll be working to develop a strategy."
Uncle Sam's Deal
The deal would have allowed the government to buy up bad debt from banks, which in turn frees up credit for Americans to continue borrowing money.
Key negotiators say the final version of the bill included more congressional oversight to monitor how the money is spent to make sure taxpayers get something for their money.
"We sent a message to Wall Street: the party is over!" House Speaker Nancy Pelosi said.
The bill would have given the treasury access to an immediate $250-billion. An additional $100 to $350-billion would be available upon congressional approval.
It also limited executive pay to firms getting government help and assures taxpayers ultimately would be reimbursed for any losses.
Not Out of the Woods Yet
Many were not happy with the plan and especially from House Republicans.
"It's not exactly the bill we would've crafted, but it's a long way from where it was just a few days ago. substantially more taxpayer protections," Rep. Roy Blunt said. "I think you can much more adequately describe these bills now because of the elements that have been put into it as a workout of the problem instead of a bailout of the problem."
Rep. Brad Sherman said, "I think there is a range of opinion from hold your nose and vote yes, to vote no, to scream no."
While lawmakers tried to rally votes on Capitol Hill, they re-packaged the bill in a bid to convince voters that it's not a bailout to rescue Wall Street, but a buy-in to turn the economy around.
Republicans and Democrats acknowledge things won't get any better unless they act now.
"The downside of not doing this is potentially such a catastrophe for our nation that we don't even want to think about it," said Sen. Judd Gregg who sits on the Senate Budget Committee.