U.S. Lawmakers Spurn Pleas From Leadership in Rejecting Bailout

By Nicholas Johnston and Dawn Kopecki

Sept. 30 (Bloomberg) -- Lawmakers from Texas, Arizona, and California helped defeat a $700 billion credit-market rescue in the U.S. House, voting more in line with their followers, or constituents, than their leaders.

The bill was a priority for President George W. Bush, yet 15 of 19 Republicans from his home state, Texas, voted against it. Republican presidential candidate John McCain left the campaign trail to help the measure, which didn't get a single vote from his state of Arizona. Almost half the usually loyal California Democratic delegation rebuffed House Speaker Nancy Pelosi.

For too many lawmakers, five weeks before Election Day, the threat of market calamity and arm-twisting from party leaders couldn't overcome impassioned opposition back home, where the rescue plan is drawing fire as a bailout for rich Wall Street bankers.

``Americans are angry, and so are my colleagues,'' said Republican Leader John Boehner. ``They don't want to have to vote for a bill like this.''

A Bloomberg/Los Angeles Times poll last week showed that 55 percent of Americans were against using taxpayer money to rescue Wall Street, with 31 percent in favor. Opponents, far more vocal than supporters, have seemed like an even bigger majority in congressional offices, which have been flooded with critical calls and e-mails.

``The American people rejected this bailout, and now Congress did likewise,'' Indiana Republican Mike Pence said after the vote.

In yesterday's action, a compromise plan worked out by congressional leaders and the Bush administration fell 12 votes short of approval. U.S. stocks plummeted the most since 1987, losing $1.2 trillion in market value. The Dow Jones Industrial Average nosedived 778 points, the biggest point drop ever.

Republicans Buck Leaders

Members of Bush's own party in particular bucked their leaders, as more than two-thirds of House Republicans rejected the measure. In the immediate aftermath, some Republican leaders pointed fingers at Pelosi, saying the Democratic speaker turned off some potential Republican votes with a speech blaming ``failed Bush economic policies'' for the financial crisis.

The speaker's political jabs, however, weren't a factor to many conservative Republicans who just didn't want taxpayers ponying up $700 billion for Wall Street, said California Republican Representative Darrell Issa. The financial crisis left many lawmakers more frustrated with Treasury Secretary Hank Paulson, Federal Reserve Chairman Ben S. Bernanke, and Securities and Exchange Commission Chairman Christopher Cox, Issa said.

``They aren't pissed off at Pelosi,'' Issa said. ``They are pissed off at Paulson, they are pissed off at Bernanke, they are pissed off at Cox.''

`No Way to Sell This'

While most Democrats backed the proposal, 95 of them also voted no.

``There is no reason for us to go in there and bail out George Bush,'' Missouri Democrat Emanuel Cleaver said. ``I don't think anyone is going to step out on a limb,'' he said, because ``there is no way to sell this'' to voters.

Even so, before the vote, leaders of both parties were anticipating a narrow victory for the legislation. Adam Putnam, the House's No. 3 Republican, predicted a ``squeaker.'' Jim Clyburn, the Democrats' chief vote-counter, predicted Democrats ``are going to have enough votes.''

The bill failed 228-205, even after Democrats gave both parties' leaders an extra 23 minutes after time for the roll call had expired to implore colleagues to back the legislation.

``We did think we had a dozen more votes going to the floor than we had,'' said Roy Blunt of Missouri, the chief Republican vote-counter.

Patrolling the Floor

Pelosi and Illinois Representative Rahm Emanuel, the Democratic Caucus chairman, were among leaders patrolling the House floor for support.

At one point during the roll-call vote, Pelosi approached Representatives Bennie Thompson and Jesse Jackson Jr. Thompson shook his head ``no'' before Pelosi walked away. Thompson and Jackson both voted against the bill.

Many representatives opposed the measure after meetings with former Federal Deposit Insurance Corp. Chairman Bill Isaac, who talked with groups of lawmakers over the past two days about alternatives to the steps outlined in Paulson's proposal, Issa said.

Isaac said he ``wasn't trying to get anyone to torpedo the plan.'' Some lawmakers wanted to add amendments to make the plan more palatable to them. House leaders, however, wouldn't allow changes, Isaac said.

Wisconsin Democrat David Obey said Republicans must take responsibility for knocking down the plan.

`Stepped Up'

``The fact is that Democrats delivered 60 percent of our caucus for this bill, despite the fact that this is a Republican president's bill,'' Obey said. ``There's a whole lot in that bill that we don't like either, but we stepped up to the plate as a caucus because it was the responsible thing to do.''

Some Democratic blocs rebuffed their leaders and opposed the bill: Members of the Hispanic Caucus rejected the measure 12-8 and Congressional Black Caucus members voted 21-18 against the bill.

``We do have a serious crisis,'' House Financial Services Committee Chairman Barney Frank said after the vote. ``Clearly, a large number of members of the House don't believe that. Some had a different view. Some said there was no great crisis.''

Senate Banking Committee Chairman Christopher Dodd said the House's action represented more than just the failure of a bill. ``It was a failure to understand the import of the decision,'' Dodd said. ``It was a failure to step up and exercise the will.''

To contact the reporters on this story: Nicholas Johnston in Washington at njohnston3@bloomberg.net; Dawn Kopecki in Washington at dkopecki@bloomberg.net

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