Massive financial bailout fails in the House
Debate prior to balloting showed deep reservations about $700 billion plan
WASHINGTON – The House of Representatives rejected a $700 billion bailout today following extended debate where many members, including some who brokered the deal with it, was highly unpopular.
The preliminary vote was 185-197. Members had a limited amount of time to change their votes. Following the deadline, the margin was growing for those opposed to the measure.
Even as the electronic roll call began, Democratic and Republican leaders were uncertain about having enough votes to pass the politically unpopular plan. It’s the most sweeping government intervention in markets since the Great Depression.
The bailout puts in place an unprecedented federal program to buy up rotten assets from cash-starved firms. The goal is to free up choked credit that was threatening to cause broader market turmoil.
Many of us feel that the national interest requires us to do something which is, in many ways, unpopular,” said Rep. Barney Frank, the Financial Services Committee chairman, before the vote. “It is hard to get political credit for avoiding something that has not yet happened.”
The bill was the product of marathon bargaining over the weekend among various House and Senate representatives.
President Bush urged the bill’s passage, saying in a White House appearance Monday morning that “every member of Congress and every American should keep in mind that a vote for this bill is a vote to prevent economic damage to you and your community.”
“With this strong and decisive legislation,” he said, “we will help restart the flow of credit so American families can meet their daily needs and American businesses can make purchases, ship goods and meet their payrolls.”
As debate opened, Frank, D-Mass., called the measure “a tough vote,” but a necessary one to stave off a financial meltdown. It lets the government buy sour assets — mostly mortgage-backed securities — from struggling financial institutions in a bid to clear out clogged avenues of credit for businesses and individuals alike.
At the White House, spokesman Tony Fratto confirmed vigorous efforts to get the bill through.
“We’re going to keep working with them right up until the vote,” he said.
Fratto also said that Bush, Vice President Dick Cheney, Treasury Secretary Paulson, White House chief of staff Josh Bolten and other top officials were contacting House members in an effort to rally support, and that the president himself had call list of “a couple dozen members.”
Fratto said Bush was telling aides some of those he’d talked to were committed to voting for the bill while “others remained skeptical.”
With their dire warnings of impending economic doom and their sweeping request for unprecedented sums of money and authority to bail out cash-starved financial firms, Bush and his economic chiefs have focused the attention of the world and the markets on Congress, said Republican Rep. Paul Ryan of Wisconsin. Without the bill, Ryan added, “the worst is yet to come.”
“We’re in this moment, and if we fail to do the right thing, Heaven help us.” he said.
As Democratic and Republican leaders hunted for votes, leaning on lawmakers to take a political hit for the good of the country, Ryan said, “We’re all worried about losing our jobs. … Most of us say, ‘I want this thing to pass, but I want you to vote for it — not me.’ ”
Two leading players also spoke early Monday, lobbying on morning television news shows for approval of a package deeply unpopular with a public angry that taxpayer money will save Wall Street firms from heavy risk-taking. Thousands of angry phone calls, e-mails and letters have poured into Capitol Hill from constituents. Supporters essentially acknowledged that it was a hold-your-nose-and-vote matter.
