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WASHINGTON, DC - The proposed massive bailout of Wall Street has been rejected by members of Congress amid dramatic scenes, after strong objections by the public to the US$700-billion ($1-trillion) rescue plan.

The White House and Congressional leaders, who reached a compromised agreement on the financial package on Sunday, were confident that the measure would pass.

But rank-and-file members of both the Republican and Democrat parties rebelled, after many received complaints from their constituents throughout the morning about the deal to use taxpayers’ funds to buy devalued assets of major Wall Street firms.

All 435 members of the lower House of Representatives face re-election on Nov 4.

A total of 132 out of 199 Republicans voted against their whips and against their President despite a morning appearance by Mr George W Bush urging them to approve the Bill for the good of the nation.

With just a simple majority needed to pass the Bill, 94 Democrats joined the rebellion, defeating the Bill by 228 to 205. Party whips attempted to twist arms, to no avail. The Bill will now have to be reintroduced at a later date.

The Bill was defeated by an unlikely alliance of conservative Republicans who viewed the Bill as “socialism” and left-wing Democrats who resented the fact that the Bill did not contain more provisions to help struggling homeowners.

The Dow Jones industrial index plummeted suddenly as news of the rejection hit Wall Street. The Dow had already dropped by about 300 points, and then fell a further 300 points in a matter of minutes, before recovering slightly. The Daily Telegraph

Source : Today - 30 Sept 2008