The stock market plunged as the House of Representatives rejected 228-205 the $700 billion Wall Street rescue plan hammered out over the weekend. The vote was a stunning defeat for the White House and Congressional leaders, but many saw it as a victory for taxpayers who have been increasingly outspoken about the bailout.
Talk shows and Internet forums have been swamped with angry voters threatening to vote against anyone and everyone associated with the bailout.
As Troy of Lancaster, Pa., put it in a posting to ConsumerAffairs.com: "I'm voting ANTI-INCUMBENT on my ballot. We did this a few years ago in the State of Pennsylvania, and fired nearly half the bums in the legislature. We need to do the same at the U.S. level."
With an election just weeks away, it was hard to find anyone on Capitol Hill who was eager to vote for the measure as taxpayer outrage grew. "The American people rejected this bailout and now Congress did likewise," said Rep. Mike Pence (R-Ind.).
Texas Republican Jeb Hensarling was one of the leading opponents of the measure, claiming it would have put the U.S. on the "slippery slope to socialism."
President Bush was disappointed, his spokesman said.
"There's no question that the country is facing a difficult crisis that needs to be addressed," said White House spokesman Tony Fratto. He said the president planned a meeting for later today "to determine next steps."
Wall Street analysts had insisted the action was necessary to keep U.S. credit markets from seizing up and global financial markets from collapsing, perhaps as early as Monday morning.
Wall Street took the news hard. The Dow Jones Industrial Average plummeted more than 750 points to close below 10400, the biggest one-day loss ever. Oil futures dropped on fears of slowing demand. Gold prices climbed.
The next question is, "what now?" It the situation is as dire as analysts have described it, what can consumers expect?
That, of course, is the great unknown, but as banks decline to extend credit, even to good customers, businesses large and small will feel the squeeze. Particularly, businesses that rely on credit.
A hardware store, for example, which borrows to pay for its inventory until it can sell it, may find that it can longer get the money to restock its shelves. It may have to layoff employees, or in a worst case, close its doors.
Already, the nation's largest Chevrolet dealership has shut down this month, saying it could not get the money it needed to continue operating.
People trying to sell their home may find a bad market will become a nearly impossible market.
The plan contains many of the elements originally proposed by Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke. Congress added provisions to make it politically palatable, since the plan drew strong opposition from the public.
Among the provisions, the plan would have established a government entity to purchase mortgage-backed securities from banks, who for months have not been able to find anyone to buy them. That's because, with so many foreclosures, it's difficult to know how much value the securities have.
Under the plan, the government would have offered to buy the assets at a low price. While the banks would lose money on the deal, they would at least have liquidity with which to make loans, and hopefully become profitable again.