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House Vote Rejects Financial Bailout Plan, 228-205

A $700B financial bailout plan has been voted down by the U.S. House of Representatives. Congressional leaders and the Bush administration had reached a tentative deal Sunday on a new version of the financial rescue plan, one that included limitations on executive compensation and sought to protect taxpayers from shouldering at least some of the enormous costs of the aid package (see a Draft of the Bailout Plan, from the New York Times).

Today's 228-205 vote in the U.S. House of Representatives stalls any large-scale bailout efforts. In a statement issued Monday, President Bush had called on Congress to "send a strong signal to markets at home and abroad by passing this bill promptly." According to the Chicago Tribune, lawmakers agreed Sunday to a proposal that divided the bailout into two phases, "starting with $350 billion but requiring congressional approval for a second pay-out," and "includes a demand that if the government does not recoup all the money that it invests in reselling mortgage debt that it purchases, it comes up with a plan to get the financial industry to cover any projected taxpayer losses."

Reuters reports that, under the new bailout plan, the "government will take a stake in companies that tap federal aid so that taxpayers can share in the profits if those companies get back on their feet," and "if the Treasury takes a stake in a company, the top five executives would be subject to limits on their compensation."

• President Bush Discusses Financial Rescue Legislation (WhiteHouse.gov)
• N.Y. Times: House Rejects Bailout Package, 228-205; Stocks Plunge
• Chicago Tribune: Historic $700 Billion Bailout Deal Reached
• Reuters: Key Elements of Congress' Bailout Plan
• Draft of the Bailout Plan [PDF file] (N.Y. Times)
• WSJ.com: McCain and Obama Indicate Support for Bailout Deal
• In Focus: The Economy (WhiteHouse.gov)

Full post as published by FindLaw's Common Law on September 29, 2008 (boomark / email).