MercoPress. South Atlantic News Agency

Nay to bail-out plan; markets plunge; Obama calls for calm

Historic vote at the US Congress

The lower house of the US Congress voted down on Monday the 700 billion US dollars package aimed at bailing out Wall Street. Democrat presidential candidate Barak Obama on the trail campaign called for calm and said he expected Congress to pass a bail-out bill in some form.

The rescue plan, a result of tense talks between the government and lawmakers, was rejected by 228 to 205 votes in the House of Representatives. About two-thirds of Republican lawmakers refused to back the rescue package, as well as 95 Democrats. Shares on Wall Street plunged within seconds of the announcement, after earlier falls on global markets. A White House spokesman said that President George W Bush was "very disappointed" by the result. US Treasury spokesman said that Mr Bush, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke would meet to discuss the way forward. The vote followed a day of turmoil in the financial sector. "The Secretary will be consulting with the President, the Chairman of the Federal Reserve, and Congressional leaders on next steps. In the meantime, we stand ready to work with fellow regulators and use all the tools at our disposal, as we have over the last several months, to protect our financial markets and our economy." Wachovia, the fourth-largest US bank, was bought by larger rival Citigroup in a rescue deal backed by US authorities; Benelux banking giant Fortis was partially nationalized by the Dutch, Belgian and Luxembourg governments to ensure its survival; the UK government announced it was nationalizing the Bradford & Bingley bank; global shares fell sharply – the UK TTSE 5.3%, France's key index lost 5%, Germany's main market dropped 4% while US shares also lost ground. So grave are the consequences of this decision, reports the BBC's Kevin Connolly from Washington that the speaker of the house paused for several long minutes after the vote was taken before declaring it official. The no vote plunged the world of Washington politics into turmoil and the markets into deep and instant chaos with rapid falls on Wall Street, our correspondent says. Mr Bush had argued that the bail-out plan was a "bold" one which he was confident would restore strength and confidence to the US economy. But after a several hours of impassioned debate, the bill's opponents - the majority of whom were from the Republican Party - got their way. They had raised concerns about both the content of the plan and the speed with which they were being asked to pass it. Some agreement on issues such as oversight, greater protection for taxpayers and curbs on executive bonuses had been reached in fraught weekend talks. But these concessions ultimately failed to persuade enough lawmakers that the plan was in the best interests of the nation. Speaking after the vote, Republican leaders in the House of Representatives suggested the Democrats were to blame, accusing them of failing to mobilize their majority in the chamber. Democratic presidential candidate Barack Obama spoke shortly after the vote, saying it was an outrage that ordinary people were being asked to clean up Wall Street's mess. "If I am president I will review the entire plan on the day I take office to make sure that it is working to save our economy and (that) you get your money back," he said. He added that he expected the Congress to pass a bail-out bill in some form and called for calm, although he admitted the path could be a difficult one. Frantic steps will now be taken to get some kind of amended version of the bill through Congress, our correspondent says. But this vote would have shaken the confidence of the financial world and the ability of US leaders to come up with convincing answers at a moment of crisis, our reporter adds.