Pelosi's blunder derails bailout; House must reconsider its vote

Monday's House vote rejecting the "bipartisan" bailout bill was a good demonstration why this Congress, at 15 percent, has the lowest public approval rating ever recorded.

On Monday, Speaker Nancy Pelosi, D-Calif., failed to get her own party to fully support the bill she advertised as critical, and she clearly alienated House Republicans who did not agree with her (or President Bush) on the seriousness of the situation facing the nation. The call for a vote was surrounded by partisan posturing, particularly by Speaker Pelosi and House Financial Services Committee Chairman Barney Frank, D-Mass., trying to place blame for the current situation wholly on the White House and House Republicans.

That was no way to build maximum support for the bill. Jeering at the opposition is a luxury in which only winners can safely indulge, and Rep. Pelosi was not a winner. She not only failed to give House Republicans a reason to join the legislation largely dictated by Rep. Frank, she could not even find the necessary 12 votes to change the outcome within the Democratic caucus, where 95 members voted no.

On the other side, President Bush's inability to persuade more GOP House members to support the bill (only 65 Republicans voted for it) further confirmed the weakness of his lame-duck status.

The immediate effect of the House's failure to advance the bailout plan was evident in the precipitous fall of stock market prices on Monday following the vote. The Dow Jones industrial average declined nearly 800 points, a single-day record.

The further consequences of this debacle will become obvious in coming days. If Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke are correct in assessing the need for a massive federal intervention in credit markets, we are likely to see more banks fall into oblivion. Expect grave difficulties for businesses seeking short-term bridge loans, further stock market sell-offs, further job losses and severe trickle-down effects for consumers. A global recession is increasingly likely.

Congress might not return to this subject until after the Jewish High Holidays on Thursday. Given the extended delay — it has now been 11 days since the administration came to Congress for help — President Bush must swiftly use laws already on the books to help credit markets.

It is important, in the months to come, to sort out the roots of this crisis and why it has taken Washington by surprise. But the crisis is still with us. We can only hope Monday's legislative debacle will not do further harm.

The voters should recognize that Speaker Pelosi let them down, big time, by calling the bailout critical and then failing to find the votes to win it. The House should quickly restore confidence to the financial sector by expediting passage of the bailout package, before greater damage is done.