WASHINGTON. - The House on Monday defeated a $700 billion emergency rescue package, ignoring urgent pleas from President Bush and bipartisan congressional leaders to quickly bail out the staggering financial industry.
Stocks started plummeting on Wall Street even before 228-205 to reject the bill was announced on the House floor.
As the vote was shown on TV, stocks plunged and and investors fled to the safety of the credit markets on fears that the financial system would keep sinking under the weight of failed mortgage debt.
A White House spokesman says President Bush is very disappointed in Monday's House vote rejecting the administration's rescue plan for the nation's financial industry.
"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 be meeting with members of his team later in the day "to determine next steps."
The aim of the rescue was to unfreeze the credit markets - short-term lending among banks and corporations. The core of the problem is bad real estate loans that have led to record foreclosures when the housing bubble burst and home prices declined.
In the past two weeks, the banking world and Wall Street have been reordered by a wave of collapses and corporate mergers. The most recent development was the seizure by federal regulators on Thursday night of Washington Mutual, once the nation's largest thrift and a major mortgage lender.