Hill Leaders, White House Vow to Try Again on Bailout as Stocks Plunge

In the end, 140 Democrats voted for the package, along with 65 Republicans. Ninety-five Democrats voted no, as did 133 Republicans. One Republican, Jerry Weller of Illinois, did not vote.

The rejection of the bailout bill was a stunning defeat for the White House and congressional leaders from both parties.

Republicans blamed what they called a sharply partisan speech by Speaker Nancy Pelosi , D-Calif., but Democrats called those claims mere cover for a GOP leadership failure.

In her speech, Pelosi said the House had a responsibility to pull the financial system back “from the precipice.”

But she also expressed anger that the system was pushed to that ledge, blaming the Bush administration’s “right-wing ideology, anything-goes, no-discipline, no regulation” philosophy.

House Minority Leader John A. Boehner , R-Ohio, had pleaded with members to pass the bill just minutes before the vote. “I believe what’s in the best interest of our country, as I stand here today, is to vote for this bill,” he said.

Asked what would happen next, Boehner said simply, “I don’t know.”

Boehner said GOP leaders could have produced enough votes to pass the plan “had it not been for the partisan speech the Speaker gave on the floor.”

Mike Simpson , an Idaho Republican, also placed the blame on Pelosi. “I know members who said, ‘If I wasn’t a no before I am now,” Simpson said.

GOP leaders said they could have come up with another dozen votes had it not been for the Pelosi speech.

Democrats retorted angrily that they had delivered a clear majority of their caucus’s votes. Majority Whip James E. Clyburn , D-S.C., said, “60 percent of the Democrats voted yes, and 67 percent of the Republicans voted no. Do the math.”

Clyburn said Republicans who opposed the bill “put political ideology ahead of the interests of our country.”

House Financial Services Chairman Barney Frank , D-Mass., blasted the GOP’s claims about Pelosi’s speech. “If that stops people from voting on something like this, then shame on them,” he said.

Hill Leaders, White House Vow to Try Again on Bailout as Stocks Plunge

“I would not have imputed that degree of pettiness or hyper-sensitivity” to the minority, Frank said. “Somebody hurt my feelings, so I will punish the country? That’s hardly plausible.”

Frank, tongue in cheek, said if Republicans would give him the names of their 12 members who were so offended they refused to vote for the bill, he would promise to “uncharacteristically” go say “something nice” to them.

For the time being, the way forward is unclear. “Stay tuned,” said Pelosi. “What happened today cannot stand.”

With such strong GOP resistance to the current proposal, finding a way forward could be difficult. “I don’t know what the alternative will be, but I’ll be willing to listen,” Frank said.

About an hour after the vote, Pelosi said she had spoken to Treasury Secretary Henry M. Paulson Jr. and told him that she had done what she could to deliver Democrats.

“The legislation failed. The crisis has not gone away. We must work in a bipartisan way to have another bite of the apple,” she said.

Boehner and Minority Whip Roy Blunt , R-Mo., who had helped to draft the final bill, said they would try again. “We need everybody to calm down,” said Boehner.

Majority Whip Steny H. Hoyer , D-Md., said, “It’s incumbent upon us to continue to work in a bipartisan fashion ... to try to address this very, very serious issue that confronts our economy and our country.”

Sen. Judd Gregg , R-N.H., warned, “If we don’t act promptly and effectively, then a lot of people are going to lose their jobs.”

In any event, most House members left town Monday, as Jewish lawmakers went home to celebrate Rosh Hashanah.

Any further action will have to wait until Thursday as a result.

Arguments in Vain

Advocates insisted passage of the legislation was essential to avert a broad economic collapse. Opponents questioned whether the plan would work, and whether it was even necessary.

Hill Leaders, White House Vow to Try Again on Bailout as Stocks Plunge

Frank, who helped write the bill, said there was a crisis of confidence in financial markets worldwide, and Congress has no choice but to act.

“We need to act to avoid something worse from happening than has already happened,” he said.

Asked after the House vote what the next step would be, Frank said, “I think we have to see ... what the economic reaction is.”

Is he worried about the markets? “Yeah,” Frank said.

“I would like nothing better than to be proven wrong in the next couple of days,” Frank said. “If in fact that turns out to be the case I will very cheerfully admit error and take the rest of the year off,” he said.

If economic stress intensifies, Frank said, Democrats are ready to resume work with the administration and congressional Republicans. “We’re ready. I still believe it’s important to the country to come up with a piece of legislation that will alleviate this credit crisis .... But we do ask that there be some better coordination between the administration and the Republican side,” in order to get a bill passed.

Prior to the vote, Hoyer praised Boehner’s courage for backing the plan despite the opposition from House GOP conservatives, who could strip Boehner of his leadership post in the next Congress. He joined the GOP leader in urging support for the bill. “Inaction will result in greater pain for the people of our country,” he said.

Frank acknowledged members were facing a tough vote. “It’s hard to get political credit for avoiding something that hasn’t happened but you think is going to happen,” he added.

Rep. Thomas M. Davis III , R-Va., echoed that sentiment. He cited the failures of more banks since the bailout negotiations began, including institutions that collapsed just this weekend in Europe. He said refusing to support the plan would be like residents of New Orleans refusing to leave before Hurricane Katrina.

“If it doesn’t pass, I think it’s a really big deal,” Davis said. “If you’re going to ignore the storm warnings, you’d better take care. I haven’t heard a better plan.”

Rep. Adam H. Putnam of Florida, chairman of the GOP Conference, picked up and amplified that approaching-storm theme. “You have to see that same analogy now,” he said. “One bank after another failing, rolling out of New York, rolling out of Brussels, rolling out of places that seem so foreign, into our Main Streets.”

It is up to Congress, he said, “to do everything in your power” to prevent the storm from swamping the U.S. economy. The objective, he said, is “to prevent a collapse the likes of which we have not seen in this country since the 1930s,” when the Great Depression devastated the nation.

The package’s massive scope and eye-popping initial price tag drew fire from lawmakers in both parties, fracturing normal voting dynamics.

Hill Leaders, White House Vow to Try Again on Bailout as Stocks Plunge

Bush spoke early Monday from outside the White House in a last-minute attempt to rally support for what he called “a bold bill that will help keep the crisis in our financial system from spreading throughout the economy.”

“I fully understand this will be a difficult vote,” he said. But he told the public that a vote for the bill is “a vote to prevent economic damage to you and your community.”

To underscore that message, congressional leaders titled the bill the Emergency Economic Stabilization Act of 2008.

Marathon Negotiations

Monday’s dramatic showdown followed an exhausting weekend of non-stop negotiations and lobbying by top Democrats and Republicans.

At its core, the plan would give the Treasury Department what it asked for - authority to buy up to $700 billion in troubled assets, mostly mortgage-backed securities, from financial institutions. The department would hold them and sell them at a later date, when the market stabilizes.

As altered during talks by Treasury Secretary Henry M. Paulson and congressional leaders, the package also includes conditions insisted upon by Democratic and Republican lawmakers.

It would have parceled out the money in installments, set limits on executive compensation for companies who accept government help; created a government insurance plan for shaky assets, with premiums paid by financial institutions, and tightened oversight of the program.

Alan K. Ota, Molly K. Hooper, Jonathan Allen, Kathleen Hunter, David Clarke, Bart Jansen, Michael Teitelbaum and Liriel Higa contributed to this story.