The United States House of Representatives voted against the planned US$700 billion bailout package on Monday afternoon, sending markets sharply lower.
The S&P/TSX composite index plunged 840.93 points, or 6.9%, while the Dow Jones industrial average dropped 777.68 points, or 7%. Those were the biggest one-day point losses ever for both indexes, but smaller on a percentage basis versus Oct. 19, 1987 when the TSE 300 (now the S&P/TSX composite) fell 11.3% and the Dow plunged 22%.
The House voted 228-205 against the rescue plan despite support from the leading Democrats and the White House. Democrats voted 140-95 in favour of the bailout while Republicans voted 65-133 against the plan.
The bailout package was designed to buy bad loans from financial firms’ books in an attempt to restore lending activity.
In a speech earlier Monday, U.S. President George W. Bush said that: “Without this rescue plan, the costs to the American economy could be disastrous.”
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