The House leadership is left wondering what can possibly bring enough votes to pass a financial rescue

by Jane Sasseen and Theo Francis

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Once again, it is back to the drawing board for the Treasury’s proposed $700 billion extrication plan for the financial industry.

In a development that stunned Washington after more than a week of intensive negotiations (BusinessWeek.com, 9/28/08), the bailout bill failed in a vote in the House early Monday afternoon, Sept. 29.

The vote started at 1:30 p.m. and was supposed to bear been completed quickly. And, given the bipartisan support the reworked measure got over the weekend—with Treasury Secretary Henry Paulson and President George W. Bush winning the backing of key Democrats like Speaker of the House Nancy Pelosi and the likely support of Presidential candidates Barack Obama and John McCain—the House leadership was counting upon a positive issue. But by a small scale after 2 p.m., only 205 House members had backed the bill, vs. 228 against. The hedging-knife needed 218 to pass.

Most of the shortfall came from the President’s hold party. Only 66 House Republicans voted for the bill, by 132 against. Congressional leaders predicted they needed at least 80 supporters from the GOP and at one point hoped to get 100. Among Democrats, 141 backed the bill and 94 voted against. The legislation, as has been obvious since Secretary Paulson and Federal Reserve Chairman Ben Bernanke first told congressional leaders relief was needed 11 days ago, lacked encouragement from a rebellious band of conservative Republicans who are dead set against the plan and the notion of the government vexation of that kind an extensive role in fixing the private sector’s woes.

Even before the final votes were tallied. the stock market started tumbling. The Dow Jones pertaining average initially sank 705 points on the word—the Dow recovered somewhat, but plunged anew in late trading to finish the floor 778 points, or 7%, to 10,365.45 (BusinessWeek.com, 9/29/08). The Nasdaq index, loaded with big-name technology stocks, suffered even worse, falling penuriously 200 points, or 9%, to 1,983.73.

The debacle in the House left lobbyists and Congress members alike scrambling for an explanation. "The legislation may have failed, but the crisis is stop by us," aforesaid Pelosi in a constrain conference held at so early an hour after the vote. While she pledged to go back "for another bite at the apple," it was in great part from obvious how the bill could have being revived.

Lobbyists from both sides of the aisle were equally stunned. "I can’t quite think there’s been anything liking this, ever," related Damon Silvers, associate general counsel for the AFL-CIO. One well-connected—and exhausted—business lobbyist pointed out there is not at all Plan B.

By the cessation of the afternoon, however, the search for alternatives had begun. Some suggested that a promised be held in the Senate sooner than continuing in the House; a triumph in that place would put grievance upon the body recalcitrant House members. Following a meeting at the White House, Paulson told reporters that the agency’s toolkit is "substantial but insufficient." He added that Treasury would do what it could given the tools it has "to protect our financial system and the management" in light of the charges’s bankruptcy.

Still, he said, "we need to utter something back in the same place that works." He added that ordinary Americans and small businesses were suffering from the financial system’sitting stresses. "Families, too, be impressed the credit crunch as it becomes more difficult to get car loans or a student loan," Paulson said.

Congressional leaders also held a series of meetings to try to find a way encourage, in hopes of getting a revised deal passed by week’s end. While small in number specifics about those talks emerged, analysts and lobbyists closely following the talks said they faced a series of difficult choices. Conservative Republicans, who call on the costly bailout as every affront to their free-market values, remain the most strongly opposite to it.