Debacle

In the end, the vote was not even very close.

The $700 billion bailout for the financial sector, over which the country’s leaders had slogged for the past 10 days, went down 205 votes to 228 on the House floor Monday.

As it sank on Capitol Hill, it took Wall Street with it. The Dow Jones Industrial Average plunged in the immediate aftermath of the legislative debacle, as traders responded with dismay to the sight of their lifeline, so tantalizingly close, being pulled beyond their grasp.

Controversial as it obviously was, the rescue package agreed to by the White House and congressional leaders of both parties during the past several days was one for which Treasury Secretary Henry Paulson was willing to get down on his knees, literally, to beg House Speaker Nancy Pelosi (D-Calif.) to help pass.

But few supporters were nearly so fervent. From their different perspectives, too many Democrats and Republicans became agreed that it was a deal more for Wall Street than for ordinary people and that it was an unconscionable use of taxpayers’ money.

Even many of the 140 Democrats and 65 Republicans who agreed the package should pass held their noses while they did so. House Minority Leader John Boehner (R-Ohio), who voted “aye” on Monday, had described the deal only a day earlier as a “crap sandwich.”

Boehner wasn’t much of a salesman on the floor, calling the package “awful” but necessary.

Exactly how events proceed remains unclear, but neither the administration nor the congressional leadership will suddenly think a rescue package less urgent now that the first vote has handed them a defeat. Instead, the markets’ reaction will presumably convince them to redouble their efforts.

So, another package will probably be presented on the floor for a vote by the House later this week. It will have to contain sufficient changes to swing about a dozen votes, but it will, in all likelihood, be very similar to the legislation that just went down in flames.

What seems highly unlikely is that Congress will go into recess without having sent the president a rescue package enough like this one to be recognizably its descendant. One Wall Street practitioner commented Monday that he dreaded to think how investors would react if lawmakers went home with this work not done. Lawmakers probably dread to think about it, too.