Dow Plummets
After House Rejects Bailout

The House of Representatives rejected a proposed bill intended to rescue the U.S. economy by a 228-205 vote on Monday. The House's rejection of the $700 billion bailout plan for America's largest financial institutions was in spite of President Bush's warnings that the economy would fail without it.

Wall Street reacted to the news with a 777-point drop in the Dow Jones Industrial Average -- the most for a single day in its 124-year history -- ending Monday at 10,365. The NASDAQ fell 9% to 1,983.

Congressional leaders on both sides of the aisle have vowed to approve a revised plan. The House was slated to adjourn for the year on Monday, but the session will continue now that the bill was rejected. Lawmakers will regroup on Thursday for a possible vote, and both Republicans and Democrats say they are confident a middle ground will be found on the bill.

"It is difficult for me to imagine we would leave the market to its own devices and fears until Friday," said Republican representative Adam Putnam of Florida. "We're encouraging members to understand the consequences to doing nothing, but I think members have strong convictions about this bill."

About 40% of House Democrats voted against the bill, while two thirds of Republicans did so. This, the Associated Press reports, would increase the odds of businesses losing out on critical tax breaks and possibly being required to pay the alternative minimum tax. House majority leader Steny Hoyer suggested that it could take until 2009 to reach a consensus on a tax initiative that would additionally provide relief to those affected by the economic downturn and extend tax credits for renewable energy development, business investing, education, and child care costs.

Massachusetts representative Barney Frank, who helped negotiate and write the bill, said the next step could depend on the economic reaction to the bill's failure.

U.S. Treasury secretary Henry Paulson said the House's vote was disappointing.

"I will continue to work with congressional leaders to find a forward to pass a comprehensive plan to stabilize our financial system and protect the American people by limiting the prospects of further deterioration in our economy," CNBC quoted Paulson as saying. "We've got much work to do, and this is much too important to simply let fail." (Michelle Garcia, The Advocate)