Financial Reform Watch

With the whole world watching, the House of Representatives this afternoon rejected the Emergency Economic Stabilization Act of 2008 (EESA) by a vote of 228 to 205, after more than three hours of vigorous debate.

This is despite the fact that the administration lobbied hard for passage of the bill, describing the “profound and devastating” consequences of not passing the financial rescue legislation. The White House argued that the $700 billion should not be considered an expenditure, but as an investment that may be recouped in full or turned into a profit for taxpayers, considering that close to 90 percent of the mortgages backing these securities will not default and asset prices will inevitably rise after prices have been stabilized.

During this morning’s debate, several Republican lawmakers urged a “no” vote on this legislation, but prominent Republicans, including House Republican Leader Boehner (R-OH), Republican Whip Roy Blunt (R-MO), and Rep. Paul Ryan (R-WI) took to the floor to urge their colleagues to “put the country first.” Just prior to the vote, Boehner beseeched his colleagues to collectively “look into our soul” and ask “what is in the best interest of our country.” Boehner’s sentiments were a constant refrain within his caucus, as member after member expressed regret for being forced to support a bill that is antithetical to their political philosophy. But according to Ryan, “I fear the worst is yet to come if we don’t pass this.”

The Dow has now dropped more than 750 points in response to House repudiation of the financial rescue package.