Asian markets fall sharply at opening

[pkpatriotic]

Asian markets fall sharply
Earlier, Wall Street shook after House rejects $700 billion bailout

updated 11:16 p.m. ET Sept. 29, 2008
TOKYO - The historic carnage on Wall Street spread to Asia Tuesday, with stocks across the region plunging after Congress rejected a rescue plan that investors had hoped would bolster volatile financial markets.

All major stock markets in the region tumbled sharply, succumbing to heightened fears of a broader global credit crisis.

Japan's benchmark Nikkei 225 index shed more than 544 points, or 4.6 percent, to 11,199.07 after losing 1.3 percent Monday.

Key indices in Australia and New Zealand were both down about 4 percent, Seoul's Kospi lost 3.5 percent, and Hong Kong's Hang Seng index declined 5.5 percent.

The weighted price index of the Taiwan Stock market, which was closed Monday due to a typhoon, fell 6.1 percent, even after Taiwanese Vice Premier Paul Chiu urged investors to have confidence in the island's export-driven economy and its financial markets.

The selling in Asia came after world stock markets tumbled Monday amid a flurry of government bank rescues in Europe that had investors on edge even before the House voted to reject the Bush administration's rescue plan.

The House of Representatives on Monday defeated a $700 billion emergency bailout package for the U.S. financial system, shocking capital and stock markets around the world. The Dow Jones industrial average closed down 777 points, its biggest single-day fall, topping the 684 points it lost on the first day of trading after the Sept. 11, 2001, terrorist attacks.

The downturn sapped the dollar overnight. The greenback was trading at 103.90 yen Tuesday morning in Asia from above 106 yen a day earlier, adding further pressure on major exporters.

Latin American markets were still open when news that lawmakers on Capitol Hill had rejected the bailout sent investors running for the exits from Mexico City to Buenos Aires.

Stocks in Europe had earlier ended lower, although less dramatically, as market players fretted about the health of the world's financial system, even with a U.S. bailout.

In Latin America, Brazil's main index took the hardest hit, shedding 9.4 percent to end at 46,028, after falling almost 14 percent during the session.

Buenos Aires' Merval index, meanwhile, dropped 8.7 percent to close at 1,545, while Mexico's IPC index slipped 6.4 percent to close at 23,956. Chile's Ipsa index closed down 5.5 percent to 2,631.

The Toronto Stock Exchange, meanwhile, closed down 840 points, or 7 percent to 11,285. It had been down 955 points Monday in the initial reaction to the vote in the House.

Even before the vote in Washington, markets in Europe and Asia were bleak, as a flurry of developments around the world appeared to confirm fears that the global financial contagion is likely to spread further before any recovery.

"There's an increasing realization that the cleanup and the mending of all that's gone wrong is going to take an extended period to work through, and we're going to see an extended recovery period," said Jamie Spiteri, senior dealer at Shaw Stockbroking in Sydney.

The London Stock Exchange FTSE 100 fell 5.3 percent to 4,819, while Germany's DAX dropped 4.2 percent to 5,807 and France's CAC 40 fell 5.0 percent to 3,953.

In Dublin, the Irish Stock Exchange plummeted 13 percent to 3,292 points.

The markets were responding in part to news that Dutch-Belgian banking giant Fortis NV was partially nationalized with a 11.2 billion euros ($16.4 billion) rescue from the governments of Belgium, the Netherlands and Luxembourg, after investor confidence in the bank disappeared last week.

In other activity across Europe, the British government nationalized mortgage lender Bradford & Bingley, taking over the bank's 50 billion pound ($91 billion) mortgage and loan books. In a similar move, the Icelandic government bought a 75 percent stake in Glitnir, the country's third largest bank, for 600 million euros ($878 million) to ensure broader market stability after it suffered liquidity issues.

In Germany, the country's second biggest commercial property lender, Hypo Real Estate Holding AG, said it had secured a multibillion euro line of credit from several banks.

 

[pkpatriotic]

Wall Street turmoil now spans globe - Washington Post
In Europe, banking crisis 'is everywhere' as Wall St. crisis spans globe
By Edward Cody and Mary Jordan

updated 12:36 a.m. ET Sept. 30, 2008

PARIS, Sept. 29 - The turmoil that began on Wall Street now spans the globe.

Stock markets around the world cascaded lower Monday, European regulators announced the rescue of four major banks, and U.S. and foreign officials pledged to make hundreds of billions of dollars available to ensure that banks would continue lending to each other.

Yet the contagion continued. U.S. stocks opened weak, then fell off a cliff after the House of Representatives voted down a $700 billion plan intended to restore stability to the nation's wobbly financial system. That sent Brazil's stock market down 10 percent, prompting authorities in Sao Paulo to temporarily suspend trading, amid worries of a deep U.S. economic slowdown.

In the seldom-interrupted cycle of global financial markets, the extraordinary pace and scale of events brought an abrupt end to the confident attitude displayed by European officials as recently as last week, when officials claimed that shareholders and investors there had less to fear than their American counterparts because European banks weren't as heavily exposed to the troubled mortgage loans undermining the U.S. system.

That confidence was eroded over the weekend by the emergency bank rescues. By Monday morning, after Asian stock markets had nose-dived, credit markets were seizing up, meaning that the normal flow of trading among banks wasn't taking place. The European Central Bank then announced it was pumping an extra $173 billion into European markets. In Washington, the Federal Reserve said it would make an additional $620 billion available for future lending to nine foreign central banks.

European banks are strained by the recent collapse of property booms close to home, notably in Britain, Spain, Portugal and Ireland, by exposure to bad U.S. mortgage securities, and by the general drying up of short-term credit. Concern over what might be next seemed likely to increase after the House of Representatives' rejection of the White House's $700 billion rescue plan.

In Europe, the banking crisis "can hardly spread further -- it is everywhere," said Willem Buiter, a professor at the London School of Economics and former member of the Bank of England's monetary policy committee.

In Brussels, European Central Bank President Jean-Claude Trichet sat down Sunday with several European finance ministers to discuss loosening European Union rules on government guarantees for banks in need of quick infusions of capital. Their meeting suggested that European governments feared they would need to intervene again.

French President Nicolas Sarkozy, who said Thursday that French banks appeared able to overcome the threat, summoned the country's top bank executives, his senior financial aides and the governor of the Bank of France for an urgent meeting Tuesday. His finance minister, Christine Lagarde, renewed her promise that "the government will assume its responsibilities" to prevent losses to French savings and investment account holders.

Sarkozy's office said he had conferred Friday with President Bush, pushing his idea for a meeting of heads of state from the major industrial powers by year's end to envision a top-to-bottom overhaul of the world financial system. The summit could be held at Bretton Woods, N.H., where officials met in 1944 to set the basics of today's world financial system, the Paris media reported.

European markets were closed by the time the House of Representatives voted, but in Brazil, located in a closer time zone, the news sent the Bovespa index on its largest drop in a decade. Trading was halted for half an hour.

Some economists attributed the Bovespa fall to concerns that economic troubles in the United States could hurt Brazil's commodities trade. "If the United States goes through a huge recession, other countries will suffer," said José Márcio Camargo, an economist at Opus Gestao de Recursos, an asset management firm in Rio de Janeiro. Brazil's treasury, meanwhile, injected nearly $8 billion into the country's national development bank to help companies that are having trouble accessing credit.

Guillermo Mondino, an analyst with Barclays Capital, wrote in a new report that "the global credit crunch seems increasingly to be spilling over to emerging markets. Lines of credit are tightening, disruptions in domestic banking systems are on the rise, and domestic interest rates are increasing. The result is likely to be slower growth."

Mondino wrote that Latin America may feel a credit pinch because foreign banks are such major players in the region. Foreign banks account for 80 percent of the financial system in Mexico, 51 percent in Peru, 29 percent in Chile and 22 percent in Brazil.

The day's bad news in markets began in East Asia. Japan's Nikkei average closed down 1.3 percent, while Hong Kong's Hang Seng index was down 4.3 percent and India's Sensex was off 3.9 percent. The trend continued in Europe: The London exchange's FTSE 100 closed 5.3 percent lower, Paris's CAC 40 was down by 5.4 percent, the DAX in Frankfurt closed down 4.2 percent and Moscow's Micex was off 5.5 percent.

The continent's sense of confidence was particularly undercut by the rescue of Fortis, a Dutch-Belgian banking and insurance giant that once ranked among the world's top 20 financial institutions. The Dutch, Belgian and Luxembourg governments said Monday they had put up the equivalent of $16 billion to buy the group's faltering banking operations, in effect nationalizing them for the time being.

Fortis's troubles were partly related to its role in a huge takeover deal. Its shares tumbled drastically late last week. Analysts attributed the fall to fears among investors that, despite their leaders' reassuring comments, European banks are too tightly linked to their U.S. counterparts in a globalized monetary system to escape the crisis. Even after the rescue plan was announced, Fortis stock dropped 12 percent during Monday's trading.

As the possibility of bailouts loomed in Europe, many officials had worried whether the European Union, composed of 27 countries with sometimes opposing points of view, would be paralyzed. Buiter, of the London School of Economics, said the speed of the Fortis rescue showed otherwise.

The injection of funds into Fortis "happened overnight and without anyone needing to consult with parliaments," he said. "The political capability for addressing a crisis like this is significantly greater in Europe than in the U.S. There was doubt, until today really, that multiple national treasuries would be able to agree on sharing rules."

In Britain, authorities announced a bailout for Bradford & Bingley, a bank specializing in mortgage loans. The government put up $90 billion to absorb questionable loans, the announcement said, while the Spanish bank Santander paid $37.8 billion to take over retail and savings bank branches.

"Following recent turbulence in global financial markets, Bradford & Bingley has found itself under increasing pressure as investors and lenders lost confidence in its ability to carry on as an independent institution," the British Treasury said in a statement.

Alistair Darling, Britain's chancellor of the exchequer, or finance minister, said his main concern was to protect investors and borrowers. "All of us, wherever we are, in whatever part of the world, need to do what is right in order to maintain stability and get through a period which quite frankly we have never seen the like of for a generation."

The German government, meanwhile, announced that it had orchestrated a bailout of the country's second-biggest commercial property lender, Hypo Real Estate Holding AG. The German Finance Ministry said it arranged an emergency credit line of $50 billion for the bank from several private lenders.

The rescue came four days after Finance Minister Peer Steinbrueck said the country's banking system was "extremely stable" and rejected suggestions that Germany consider a U.S.-style bailout plan for its ailing banks. "More than anything, the finance market is an American problem," Steinbrueck said in a speech Thursday to the German Parliament.

Problems at Hypo Real Estate, which lends primarily to local governments and property developers, had been known for months; the bank had posted big losses on its subprime loans in the United States. But Hypo's access to credit rapidly eroded and other problems with speculative investments emerged in recent days, forcing the German government to intervene, according to government and bank officials.

Hypo blamed its predicament on "the extremely challenging conditions in the international money markets following the Lehman collapse and other market disruptions."

Even so, analysts said that German banks remained on a stronger footing than those in the United States or Britain and that it was unlikely the government would need to fashion an industry-wide bailout. "The overall banking system in Germany shows very strong structural numbers. It's still very sound," said Stefan Kooths, an analyst at the German Institute for Economic Research in Berlin.

In Iceland, the government said Monday it had taken control of Glitnir bank, the country's third-largest, paying about $878 million for a 75 percent stake.

In France, authorities had been worrying about a sell-off of the stock of Dexia, a Franco-Belgian bank catering to local governments. The bank's stock dropped by more than a third in early trading Monday, then recovered slightly on a pledge from Belgian Foreign Minister Didier Reynders to step in with government funds if necessary.

The Paris newspaper Le Figaro said a U.S. subsidiary of Dexia, the bond insurer FSA, had caused concerns among investors because of involvement in shaky real estate mortgages in the United States.

Several analysts said the European banking problems are biggest at institutions with heavy exposure to European property bubbles. Millions of homeowners and developers took out loans against property that is no longer valued at what it was a few months ago.

Nicolas Véron, a research fellow at the Bruegel center in Brussels, said concern has risen about strains in the banking system spreading to the Baltic countries and Eastern Europe, where several nations also have experienced property bubbles.

"We knew this would happen, because the storm in the U.S. is so powerful," Véron said.

Jordan reported from London. Correspondents Craig Whitlock in Berlin, Emily Wax in New Delhi and Joshua Partlow in Rio de Janeiro and staff writer Steven Mufson in Washington contributed to this report.

 

[pkpatriotic]

Bailout vote stuns Washington, markets - Economy in Turmoil - MSNBC.com
Dow suffers record loss; world stocks plunge; Bush, House to try again
By Alex Johnson
Reporter-MSNBC
updated 8:33 p.m. ET Sept. 29, 2008

World financial markets reeled as stunned lawmakers groped for their next move Monday after House Republicans abandoned President Bush in droves to help kill his $700 billion proposal to rescue the financial services industry.

Even before the vote was announced, stocks began tanking on Wall Street. The Dow Jones Industrial Average nose-dived by more than 777 points, its worst fall ever, in a sell-off that swept markets around the globe.

As fears rose that the credit crisis was spreading, Asian and European markets closed sharply down, and governments in at least eight European countries took steps to begin rescuing large banking institutions.

Democrats and Republicans argued bitterly over who was at fault for the 228-205 vote that torpedoed a compromise bailout plan that would have allowed the Treasury Department to buy up toxic assets from struggling banks.

Lawmakers shouted news of the plummeting Dow as they crowded on the House floor during the roll call, which dragged on for roughly 40 minutes as leaders on both sides scrambled to corral enough of their rank-and-file members to support the deeply unpopular measure.

Ample “no” votes came from both sides of the aisle, but Democratic leaders managed to persuade more than 60 percent of their members to back the measure, while more than two-thirds of Republicans balked at spending so much taxpayer money just before the Nov. 4 elections.

The House canceled plans for a pre-election recess and was scheduled to reconvene Thursday, although no plan of action had yet been worked out.

Bush vows to keep working

The defeat of the measure was a severe loss for Bush, who personally led lobbying efforts to bring Republican lawmakers on board.

The president told reporters at the White House that he was disappointed by the vote and promised that “we’ll be working with leaders of Congress on the way forward.”

Administration officials were described as “shellshocked” by the defeat. They planned meetings Monday night to plan their next step, but officials told NBC News that there seemed to be no clear path forward.

Treasury Secretary Henry Paulson, saying the statutory tools at his disposal were “substantial but insufficient,” likewise vowed to “work with congressional leaders to find a way forward to pass a comprehensive plan to stabilize the financial system and protect the American people.”

“We’ve got much work to do, and this is much too important to simply let fail,” he said.

But the overriding question for was what to do next as Congress tries to adjourn so members can go home and campaign for re-election.

“We’re certainly not going to abandon our responsibility,” said House Majority Leader Steny Hoyer, D-Md. “We’ll continue to focus on this and see what actions we can take.”

Rep. Barney Frank, D-Mass., chairman of the Financial Services Committee and a leading negotiator in crafting the compromise bill, blamed breakaway Republicans for killing the plan.

Frank noted comments by some Republicans who said a floor speech shortly before the vote by House Speaker Nancy Pelosi, D-Calif., was needlessly partisan and said he had not “computed that level of pettiness” across the aisle.

“Sixty-seven percent of Republicans decided to put political ideology ahead of this nation,” he said. “The numbers of deeply offended Republicans turned out to be the number you would need to defeat the vote.”

Republicans defend 'no' votes
But Republicans who voted against the bill objected, saying the measure did not do enough to protect individual investors and bank account holders.

“New York city fat-cats expect Joe Sixpack to suck it up and foot the bill for their excesses. I think not,” said Rep. Ted Poe, R-Texas.

Rep. Jack Kingston, R-Ga., said he had three insurmountable problems with the bill: It was too expensive, it rewarded Wall Street firms by guaranteeing private profits with public funds and it did not address an antiquated regulatory system.

“This throws a life jacket to Wall Street, but it doesn’t teach them to swim and prevent this from happening again,” Kingston said.

Rep. Cathy McMorris Rodgers, R-Wash., called her decision to vote no “one of the most difficult I have faced.”

“I agree this bill is much better than the one we started with,” McMorris Rodgers said. But “committing 700 billion of our tax dollars requires a longer, more thoughtful debate.”

Overseas markets plunge
Reaction was just as swift from foreign markets. Brazil’s Ibovespa stock index dived by 13.8 percent in afternoon trading, Argentina’s Merval index dropped 8.8 percent, Mexico’s Bolsa index slipped 6.2 percent and Chile’s Ipsa index fell 4.6 percent.

The slide was already well under way in Europe and Asia as nervous traders bet against a U.S. bailout. Japan’s Nikkei 225 Index fell 149.55 points and Hong Kong’s blue-chip Hang Seng Index fell 801.41 points, to close at 17,880.70. European shares suffered their biggest losses in eight months, with London’s FTSE down 5.3 percent, Germany’s DAX by 4.2 percent and France’s CAC by 5 percent.

Frank Geilfuss, head analyst at Bankhaus Loebbecke, said investors were “fearful, frenetic, especially when it comes to banking shares. They want to get out now and see the after effects from afar.”

The swings began after Wachovia Corp. agreed to sell most of its assets to Citigroup Inc. in a deal brokered by regulators. Monday, governments in eight European capitals took similar action, signaling that “the contagion is spreading to mainland Europe” said Mark Sartori, head of European sales trading at Fox-Pitt, Kelton in London.

French President Nicolas Sarkozy called for coordinated action by the European Union to step into the vacuum after the British government mortgage lending giant Bradford & Bingley Plc and Belgium, the Netherlands and Luxembourg partly nationalized Belgian-Dutch group Fortis NV.

Germany, meanwhile, led a consortium of banks to rescue mortgage lender Hypo Real Estate Holding AG secured a credit line from the German government, and bank rescue deals also emerged in Iceland, Russia and Denmark.

‘Can’t see what the upside is’
The legislation would have allowed the government to buy bad mortgages and other rotten assets held by troubled banks and financial institutions. Getting those debts off their books would bolster those companies’ balance sheets, making them more inclined to lend and easing one of the biggest chokepoints in the credit crisis. If the plan worked, the thinking went, it would help lift a major weight off the sputtering national economy.

“I can’t believe they weren’t able to come together and come up with a solution,” said Stephen Berte, a senior equity trader at Standard Life in Boston. “I can’t see what the upside is right now.”

Sen. Barack Obama of Illinois, the Democratic nominee for president, said the “inaction in Congress” illustrated why “the American people are disgusted with Washington.”

“Now is the time for Democrats and Republicans to join together and act in a way that prevents an economic catastrophe,” Obama said in a statement.

The campaign of the Republican nominee, Sen. John McCain of Arizona, used the occasion as an opportunity to blame Obama for the failure of the measure.

 

[pkpatriotic]

Without a Bailout Plan, What Will the Cost Be?
By JUSTIN FOX
Tue Sep 30, 1:15 AM ET

By voting down the proposed $700 billion financial bailout package - and causing a spectacular stock market rout - a majority of members in the House of Representatives made a clear statement that they didn't want to put taxpayers on the hook for the failures of financial institutions.

But there's a catch: taxpayers are already on the hook for the failures of financial institutions, and it's possible that the bill will actually be larger without bailout legislation than with it. That's because the regulators who mind the financial industry - the Federal Reserve, Treasury and FDIC - will keep doing what they've been doing: stepping in to prevent the chaotic failure of banks and other large financial institutions. This means continuing to put hundreds of billions of taxpayer dollars at risk, but in a way that adheres to no clear plan of action and doesn't require members of Congress to explicitly approve their actions.

On Monday afternoon, Wall Street basically stopped trading to watch TV - mainly CNBC - to see how the House of Representatives would vote on the $700 billion bailout package. When it first started looking like the bill would fail, the Dow plummeted 389 points, or 3.6%, in just seven minutes. If it had continued at that pace for much longer, this would have been perhaps the most harrowing day in stock market history. It didn't, but things were still really, really bad. The Dow ended the day down 778 points, or 7%, and the S&P 500 - a better measure of the overall market - was down 107 points, or 8.8%, its worst performance since the 1987 market crash. And markets for bonds and short-term loans were, for the most part, nonexistent.

So what happens now? On Capitol Hill, House leaders said they'll try again soon. Treasury Secretary Henry Paulson practically begged for a revised deal in his brief appearance after the market carnage. "Our tool kit is substantial but insufficient," he said. The market's traumatized reaction today may change some minds and some votes.

In asking Congress 11 days ago for the authority to spend up to $700 billion to buy troubled assets, Paulson and Fed Chairman Ben Bernanke were hoping to share some of the responsibility and the blame - and get the freedom to boost companies that weren't already on the brink of failure. Instead, they're back to being crisis managers for the moment - and maybe for the duration of the crisis.


That's not all bad, especially now that most of the endangered financial institutions are commercial banks. The Federal Government has clearly defined that authorities take them over, merge them out of existence or shut them down - whereas it had to make things up as it went along with investment banks Bear Stearns and Lehman Brothers and insurer AIG. That's why the demise of giant banks Washington Mutual and Wachovia, arranged over the past week by the FDIC, occurred in a far more orderly fashion than the non-bank meltdowns.

But orderly isn't the same as cheap. To get Citigroup to absorb Wachovia, the FDIC agreed to share the risk on a $312 billion portfolio of loans (Citi has to eat the first $42 billion in potential losses; anything above that hits the FDIC fund).

Also, the fact that every big FDIC deal so far in this crisis has been different -IndyMac was allowed to fail, with only insured deposits safe; WaMu was seized, but all depositors were protected; and Wachovia was sold in a deal that protected both depositors and owners of the company's bonds but left shareholders with very little - has left investors guessing about the fate of the rest of the banking world. Hardest hit in today's market sell-off were regional banks like Sovereign Bancorp and National City, perhaps because they seem too small to get special FDIC treatment.

Federal authorities are going to keep doing whatever they can to keep the financial system from collapsing. Taxpayers will bear the risks and the costs of that, whether Congress votes to put them there or not. And it's possible - although nobody can know for sure - that this ad hoc approach will end up costing more than an up-front $700 billion bailout.

 

[pkpatriotic]

International Herald Tribune
By Jackie Calmes Published: September 30, 2008
WASHINGTON: The collapse of the proposed rescue plan for the teetering financial system was the product of a larger failure — of political leadership in Washington — at a moment when the world was looking to the United States to contain the cascading economic crisis.
QUOTE:
Though, i am student of accounts, but at this moment I recall a law of physics that "To every action there is always opposite reaction". USA authorities must remember the laws of nature that while they are trying to influencing the globe by jeoperdize the economy & peace of the countries including Pakistan........ they fully engeged to destablize the economy and peace of others they couldnt see behind that what is going on in their own country and ultimately facing big economical crises of the history which can be cause of great change even in the world leadership (as german finance minster already stated that, us will lose its global leadership) .
Hope, its good enough for US Gov & its agencies to learn lesson from current situation..........if not........then I must feel sorry for poor helpless peoples of America, who are facing worst situation due to the dire negligence of their own government Political leaders, like us Pakistani peoples.
UNQUOTE:

From the White House to Congress to the presidential campaign trail, the principal players did not rally the votes they needed in the House. They appeared not to comprehend or address in a convincing way an intense strain of opposition to the deal among voters. They allowed partisan politics to flare at sensitive moments.

If there was any doubt that President George W. Bush had been left politically impotent by his travails over the last few years and his lame-duck status, it was erased on Monday when, despite his personal pleas, more than two-thirds of the Republicans in the House abandoned the plan.

While there were lawmakers who opposed the package on the merits, with Election Day just five weeks away, substantial numbers decided that to favor the bill would be to imperil their own political futures. And once the vote was under way and so few Republicans were voting aye, Democrats were disinclined to force more of their members to help pass the unpopular plan.

The leaders of both parties failed, many analysts agreed, in bringing the measure to the House floor without knowing whether it had the votes to pass — a bad move at any time, but especially so in this case given the risk of the markets and the badly weakened financial system reacting badly.

Representative John Boehner, the House Republican leader, became emotional as he urged his party to muster the will to approve the package. After his members overwhelmingly voted against it, he tried to shift the blame to a partisan speech delivered on the floor just before the vote by Representative Nancy Pelosi, the House speaker.

Pelosi delivered the Democratic votes she had promised, but could not muster enough of them to avert a defeat that could long be remembered.

The candidates to replace Bush, Senator John McCain and Senator Barack Obama, were far from Washington, bit actors at best in helping to resolve a crisis that one of them will inherit.

The breakdown, even if temporary, pointed up the difficulties of dealing with fast-moving emergencies through the slow-moving and inherently political legislative process. And despite rare bipartisan agreement among party leaders in this case, the gulf between what lawmakers were hearing in Washington and what they have been hearing from home proved too vast for many people, particularly Republicans, to jump.

As a study in his prospective leadership, the role of McCain, the Republican presidential nominee, has done him no political good. After suspending his campaign last week and vowing to work with Republicans until a resolution was in hand, McCain was campaigning in Ohio on Monday with his running mate, Governor Sarah Palin, as the House vote commenced. There he implicitly took credit for the compromise bailout that congressional leaders had negotiated over the weekend, even as it was going down to defeat.

On his plane before takeoff to Iowa, McCain spoke by phone with Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben Bernanke. With no credit to claim in the bill's defeat, he flew to Iowa without making a statement to reporters on board. In Iowa, he criticized Obama, his Democratic rival, before adding, "Now is not the time to fix blame."

Even before the vote, House Republicans had trouble pointing to any contributions from McCain to their deliberations since late last week, when he and they forced the administration officials and congressional leaders to reopen negotiations and alter the package to impose some safeguards for taxpayers' billions.

Obama, campaigning in Colorado, also was taken by surprise. He quickly revised his speech, which announced the bipartisan agreement, to instead call for Congress to "step up to the plate and get this done." While Obama had tepidly endorsed the plan and kept in daily touch with Paulson and congressional leaders, aides said he did not twist Democrats' arms to support it.

At the White House, aides described the president as working the phones to lobby a dozen of them. Vice President Dick Cheney, a former No. 2 House Republican leader, pitched in, with no better luck. "I think everyone with a phone is calling to see if we can shore up a member who may be skeptical of the proposal," Tony Fratto, the deputy White House press secretary, said before the vote.

But numerous other Republicans, including lawmakers and veterans of past administrations, complained that it was too little, too late. They said Bush should have summoned lawmakers to the White House and gone to the Capitol to personally plead his case — as other presidents including Bush have done in the past to sell their highest priorities. "Reagan did it!" one said.

"There probably could have been an outreach that began earlier than in just the last couple of days," said Representative Adam Putman of Florida, a member of the Republican leadership, who supported the bailout. "But it is very difficult to deal with an outgoing administration"— its leverage waning — "than one that's early in its term."

The episode underscored that Bush's credibility and political clout, long gone among Democrats, is lacking among Republicans as well. "There is a fair number of people who believe we're not staring into the abyss as has been represented," Putnam said. "And some people do believe we are facing a market collapse and something needs to be done, but they would rather not be the ones who have to vote for it."

Putnam, who lobbied colleagues opposed to the plan, said they were reporting that calls against the bailout were pouring in at the rate of several hundred to every one supporting it.

Both parties agreed the bailout would easily pass in the Democratic-controlled Senate, with support from most of the Republicans there. So the House Republicans made the difference. Their mutiny captured just how much the Republican Party has changed from its 19th-century roots as the party of business and economic stewardship.

"I don't think this was a failure of leadership so much as a failure of followership," said Thomas Mann, a scholar on Congress at the Brookings Institution. "This is a function of a group of House Republicans who are philosophically opposed to doing anything like this bailout and are prepared to take the risk."

Jeff Zeleny, Michael Cooper and Steven Lee Myers contributed reporting.