Breaking News: Bailout Voted Down

In one of the most dramatic floor votes in a long time, the US House of Representatives today rejected the proposed emergency bailout of financial institutions, and not by only one or two votes, either. The final tally was 205 for, 228 against, with Democrats supporting the measure 140-95 and Republicans rejecting it 65-133. This despite the urging of leadership of both parties, as well as the President and most national financial leaders, for passage. On news of the vote, the Dow Jones average fell over 700 points, a one-day record.

Many representatives seem to have felt that the measure, which would use approximately $700 billion to buy "bad debts" from financial firms, was so unpopular in their districts that a "yes" vote would amount to political suicide. Others felt that it represented too large of a government intervention in the free market. Even those who supported the bill were often see as "holding their nose" while voting for it, with House Minority Leader Rep. John Boehner calling it a "mud sandwich" while explaining why it was necessary. (what does that even mean?) Democrats immediately blamed the Republican leadership for failing to get their rank and file in line, while Republicans blamed Speaker Nancy Pelosi for turning off some of their members with a "partisan speech" just prior to the vote.

It's unclear where we go from here. Wall Street will probably continue its toilet spiral. The measure will probably come back up for a vote at some point this week, but it's unclear what sort of changes they'll have to make to get this past the House.

As I have said here before, I'm not an economist. But I take it as a good sign when individual members of Congress at least attempt to think for themselves and represent their districts rather than just doing what they're told. Were they right in this case? I guess we'll see.

More details here: http://www.nytimes.com/2008/09/30/business/30bailout.html?pagewanted=2&_r=1&hp