"We need to put something back together that works," Hank Paulson said after he and Federal Reserve Chairman Ben Bernanke joined an emergency meeting at the White House. On the Hill, Democratic leaders said the House would reconvene Thursday, leaving open the possibility of a TARP salvage version as all sides promised further efforts, but clearly there is confusion between saving bankers and saving the financial system. One third of Democrats and two thirds of Republicans and many or most of those up for re-election in 5 weeks' time voted against TARP, impressed by thousands of phone calls and e-mails fiercely opposing the measure. The House Web site was overwhelmed as millions of people sought information about the measure through the day.
Hoping to pick up enough GOP votes for the next try, Republicans floated several ideas. One would double the $100,000 ceiling on federal deposit insurance. Another would end rules that require companies to devalue assets on their books to reflect the price they could get in the market. As a digital screen in the House chamber recorded a cascade of "no" votes against the bailout, Democratic Rep. Joe Crowley of New York shouted news of the falling Dow Jones industrials. "Six hundred points!" he yelled, jabbing his thumb downward and a lot of partisan finger-pointing followed the vote. The Dow fell to 777 points down, far surpassing the 684-drop on the first trading day after 9/11.
"What happened today was not a failure of a bill, it was a failure of will," said Dodd, the Banking Committee chairman. "Our hope is that cooler heads will prevail, people will think about what they did today and recognize that this is not just scare tactics — it's reality." Republicans blamed Pelosi's scathing speech near the close of the debate — which assailed Bush's economic policies and a "right-wing ideology of anything goes, no supervision, no discipline, no regulation" of financial markets — for the defeat. Rep. Roy Blunt, R-Mo., the whip, estimated that Pelosi's speech changed the minds of a dozen Republicans who might otherwise have supported the plan. Rep. Barney Frank, chair of the Financial Services Committee said of those Republicans, "Because somebody hurt their feelings, they decide to punish the country."
McCain said his rival Barack Obama and congressional Democrats "infused unnecessary partisanship into the process. Now is not the time to fix the blame; it's time to fix the problem." Obama said, "Democrats, Republicans, step up to the plate, get it done." Campaign politics could not be removed from this, no more than Pelosi could resist attacking conservative ideology in what was supposed to be bipartisanship!
There was enormous pressure from angry emotional public opinion and powerful voters' groups giving notice they considered TARP a "key vote" when rating members of Congress. "Make no mistake: When the aftermath of congressional inaction becomes clear, Americans will not tolerate those who stood by and let the calamity happen," said R. Bruce Josten, of the U.S. Chamber of Commerce, in a letter to all members. The conservative Club for Growth made a similar threat to supporters of the bailout. "We're all worried about losing our jobs," Rep. Paul Ryan, declared in an impassioned speech in support of the bill before the vote. "Most of us say, 'I want this thing to pass, but I want you to vote for it — not me.' We're in this moment, and if we fail to do the right thing, Heaven help us."