The Bush administration’s mortgage bailout bill has been defeated in the House – sending the stock market plunging nearly 9%, the biggest single-day drop in two decades.
Republicans blamed a viscous partisan speech by House Speaker Nancy Pelosi for the collapse.
By a vote of 228 to 205, the Emergency Economic Stabilization Act of 2008 was defeated in the U.S. House of Representatives today.
Both Republicans and Democrats were among those voting against the legislation, which included provisions for the Troubled Asset Relief Program — a plan for the U.S. Treasury to purchase up to $700 billion in mortgage assets.
“I do believe that we could have gotten there today had it not been for this partisan speech that the speaker gave on the floor of the House,” Rep. John Boehner said in a press conference. “The speaker had to give a partisan voice that poisoned our conference — caused a number of members that we thought we could get to go South.”
“When was the last time that anyone ever asked you for $700 billion,” House Speaker Nancy Pelosi said in her late speech. “A staggering number. But only a part of the cost of the failed Bush economic policies to our country. Policies that were built on budget recklessness. When President Bush took office, he inherited President Clinton’s surpluses … with his reckless economic policies, within two years he had turned that around.
“And now eight years later, the foundation of that fiscal irresponsibility combined with an anything goes economic policy has taken us to where we are today.”
The vote represents a blow for Bush, who had called for passage of the bill to avoid dire consequences in the financial markets. Bush, normally an advocate for no government intervention in the free markets, broke with Republicans on this mostly conservative principle due to the severity of the situation.
U.S. Treasury Secretary Henry M. Paulson Jr. had worked through the weekend with members of Congress to iron out a package acceptable to both major political parties. It appeared by Sunday that a deal had been struck that would propel the legislation into law.
The stock market reacted violently — with the Dow Jones Industrial Average initially tumbling more than 700 points. In late trading, the widely watch index was still down more than 600 points to 10528. The Nasdaq was down more than 7 percent.
“The House GOP leadership blamed Speaker Pelosi (D-CA) for the defeat of the $700 billion financial intervention bill,” government owned C-SPAN reported. “Minority Leader John Boehner (R-OH) said members must ‘find a true middle ground to avert a crisis.'”
Pelosi added, “The party is over.”
Sam Garcia, www.mortgagedaily.com