Early this afternoon, the House defeated a $700 billion bailout of the financial markets, dealing a major blow to the Bush Administration’s plan to stop the hemorrhaging of Wall Street institutions.
The plan failed on a 228-205 vote. Republicans voted 65-133 against the bailout, while Democrats voted 140-95 to pass it.
It was a major victory for House Conservatives of the Republican Study Committee, led by Chairman Jeb Hensarling (R-Texas), former chairman Mike Pence (R-Ind.) and other floor fighters such as Louie Gohmert (R-Texas) and Jeff Flake (R-Ariz).
The stock market slumped sharply even before the vote was finalized, with the Dow Jones Industrial Average falling over 700 points at one point before recovering somewhat.
The bill, which was hammered out over the weekend by congressional leaders, would have given broad new powers to the Treasury secretary to purchase mortgage-backed securities that have hampered the liquidity of financial institutions.
A White House spokesman said President Bush was “very disappointed” in the vote.
"There’s no question that the country is facing a difficult crisis that needs to be addressed," said spokesman Tony Fratto. He said the president will meet with his economic team "to determine next steps."
The congressional opposition was led by conservative House Republicans.
In speaking against the measure, Rep. Jeb Hensarling (R.-Texas), chairman of the House Republican Study Committee, said “I believe that this plan is fraught with unintended consequences, would force generations of taxpayers to pick up the tab for Wall Street losses, and could permanently and fundamentally change the role of government in the American free enterprise system. Once the government socializes losses, it will soon socialize profits. If we lose our ability to fail, we will soon lose our ability to succeed. If we bail out risky behavior, we will soon see even riskier behavior.”
After the vote, a number of Republican House members blamed House Speaker Nancy Pelosi for partisan remarks she made on the floor.
Before the vote, President Bush said: “I know many Americans are worried about the cost of the bill, and I understand their concern. This bill commits up to 700 billion taxpayer dollars, because a large amount of money is necessary to have an impact on our financial system. However, both the non-partisan Congressional Budget Office and the Office of Management and Budget expect that the ultimate cost to the taxpayer will be far less than that. In fact, we expect that over time, much — if not all — of the tax dollars we invest will be paid back.”
Roll Call Vote for H.R. 3997, the ‘Bailout’ Bill
Democrats: 140 Ayes, 95 Noes
Republicans: 65 Ayes, 133 Noes, 1 Not Voting
Total: 205 Ayes, 228 Noes, 1 Not Voting
Click here for a detailed roll call vote, including by representative. The link is for the Emergency Economic Stabilization Act of 2008. Note: The description of H.R. 3997 on the link is incorrect.