In a stunning rebellion by rank and file members, the House of Representatives defied their party leaders Monday afternoon to reject President Bush’s colossal sweeping bailout of Wall Street.

“This is a huge cow patty with a piece of marshmallow stuck in the middle and I’m not going to eat that cow patty,” declared Rep. Paul Broun (R-Ga.) (Our emphasis.)

The Dow Jones industrial average fell 600 points, before rebounding slightly.

The measure went down 205 to 228 but party leaders were keeping the vote open to try to change enough minds to reverse the result.

The stunning vote came after three emotional hours of debate over the most sweeping government interference in the free market since President Franklin Roosevelt rewrote the American economy in the 1930s.

The bill, presented by Bush and Treasury Secretary Henry Paulson as a vital measure to save an economy heading for serious recession, was backed by Democratic and Republican leaders of both houses, as well as presidential candidates Barack Obama and John McCain.

As the debate began, Bush told lawmakers, “This is a bold bill that will keep the crisis in our financial system from spreading through our economy.”

Behind the scenes, administration officials were twisting arms, warning direly of financial crisis on Main Street if Wall Street doesn’t get help.

To win enough votes from rank-and-file Democrats and Republicans, party leaders said there was no choice but to vote for the bailout or see ordinary Americans lose their jobs and homes.

“The meltdown would begin, it is true, in a few square miles of downtown Manhattan. But before it was over, no small town in America would be untouched,” said Rep. Steny Hoyer (D-Md.), the Majority Leader.

But dozens of congressmen defied their leaders to vote against a bill that no one said they liked. (Our emphasis.)

Broun questioned why more government money should be thrown after the $200 billion given to Fannie Mae and Freddie Mac, the $85 billion used to save AIG and $30 to save Bear Stearns.

“This is the same old story. We’re just going further down the road,” he said.

Rep. Jeb Hensarling (R-Tex.) warned America was on a “slippery slope toward socialism.”

Illustrating the urgency of the matter, Wachovia sold itself to Citigroup this morning, another huge bank failure that means most of America’s deposits are now in the hands of just three banks: Citigroup, JP Morgan Chase and Bank of America.

In the last two weeks, Wall Street titans have fallen like dominos, from Lehman Brothers to Merrill Lynch to AIG to Washington Mutual.

The credit crisis was spreading across the world yesterday.
In London, regulators swooped in with a $280 billion seizure of mortgage lender Bradford & Bingley, sending UK stocks to a three-year low.

The sprawling Belgian-Dutch financial group Fortis also needed a bailout from Benelux

Washington’s big bailout aims to unfreeze short-term lending between banks and corporations by buying up the widespread housing-related bad debts that are paralyzing financial companies.

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