The bailout has failed

The lower house of the US Congress has voted down a $700bn (£380bn) plan aimed at bailing out Wall Street.
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.
He would meet members of his team in the coming days to “determine next steps”, spokesman Tony Fratto said. The vote followed a day of turmoil in the financial sector. 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 nationalised by the Dutch, Belgian and Luxembourg governments to ensure its survival. The UK government announced it was nationalising the Bradford & Bingley bank. Global shares fell sharply – 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.

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