The U.S. House of Representatives has rejected a massive government rescue plan for America's troubled financial institutions.
Representatives voted 228 to 205 against the 700-billion dollar proposal today on Monday.
despite warnings from the president and Congressional leaders that a
"no" vote risked throwing the United States into more economic turmoil.
U.S. stock market indexes plunged as news of the vote spread.
A Treasury Department spokeswoman says Secretary Henry Paulson will use
all the tools at his disposal to protect the financial markets. The
White House says President George Bush is disappointed with the vote,
and will meet with his top economic advisors to determine what to do
Democratic and Republican party leaders blamed each other for the
bill's defeat, but said they would try to work with each other on a new
The administration proposal that failed would have allowed the U.S.
Treasury to spend up to 700 billion dollars to buy bad investments from
financial firms. Those bad investments have made banks reluctant to
lend money to businesses and consumers.
Mr. Bush said the proposal addressed the bad home loans that are at the
center of the financial crisis. Members of Congress had added limits on
compensation to executives of rescued companies, and a requirement for
the government to try to keep homeowners from losing their homes.
Before the vote, central banks were working to stabilize markets. On
Monday the U.S. Federal Reserve made an additional 330-billion dollars
available to other central banks. Officials hope the cash will
encourage financial institutions to continue making loans available.