$700 billion bailout slips at first hurdle
Monday, 29 Sep 2008 20:16
George Bush's $700 billion rescue package rejected by House of Representatives in shock setback
The US government's $700 billion (£388 billion) rescue package has been rejected by the House of Representatives in a shock setback.
Representatives voted by 228 votes to 205 to stop the bailout dead in its tracks at its first legislative hurdle.
As the bill was turned back the Dow Jones was plummeting by six per cent on one of the worst-ever days in the world economy's history.
The White House has reacted to the failure of the bill by saying George Bush is "disappointed" by the move.
Although the bill is dead in its current form, US politicians are now attempting to reshape it so it can be approved.
Earlier, Mr Bush cautioned that the anticipated acceptance of rescue package would not immediately signal the end of turmoil in the United States' financial markets.
Speaking at the White House on Monday, Mr Bush warned the country's economic problems could last "for some time yet".
But he remained positive the "bold… extraordinary agreement to deal with extraordinary problems" would help to heal Wall Street.
"I'm confident that this rescue plan, along with other measures taken by the treasury department and the Federal Reserve, will begin to restore strength and stability to America's financial system and overall economy," the president said.
The deal aimed at rescuing the US financial system was finalised over the weekend.
The plan, which will allow the US government to buy toxic assets from banks with the $700 billion fund, was backed by Democratic and Republican leaders.
Nancy Pelosi, the Democratic speaker of the House of Representatives, said it was "not a bailout of Wall Street".
Following the bill's rejection, Ms Pelosi accused the Republicans of 'not living up to their side of the bargain' and reminded her peers that the economy remained in jeopardy.
The $700 billion deal would have seen the US government borrowing cash from the money markets to purchase bad mortgage-related debts from banks.
US presidential hopefuls Barack Obama and John McCain had both previously added their support to the bailout package.
In an initial reaction to the bill's demise, Mr Obama told supporters that Americans were not prepared to bail-out Wall Street and its "greed".