House Votes Down Rescue Plan

This morning, ahead of the vote, President Bush pushed for the need for a bailout. "I fully understand that this will be a difficult vote," Bush said, according to a transcript of his remarks. "But with the improvements made to this bill, I'm confident that members of both parties will support it. Congress can send a strong signal to markets at home and abroad by passing this bill promptly. Every member of Congress and every American should keep in mind: A vote for this bill is a vote to prevent economic damage to you and your community."

The Treasury and the Federal Reserve had been pressing Congress for more than a week to grant Treasury the authority to relieve banks of soured assets. The plan is aimed at stabilizing the credit markets, which have essentially frozen in recent days, and preventing the financial crisis from claiming more banks and further damaging the broader economy.

Although Paulson and Federal Reserve Chairman Ben Bernanke had asked Congress to quickly approve their request, it became bogged down on Capitol Hill as lawmakers -- at times prodded by angry constituents -- insisted upon more control over the Treasury's spending authority and provisions to protect taxpayers and struggling homeowners.

Talks on the bailout plan broke down late Thursday, partly because of opposition from House Republicans, who had tried to craft an alternative plan that would let banks buy insurance on mortgage-related debt they hold.