With No Plan B, House Reluctantly Passes Politically Risky Measure

The lawmakers Boehner and Blunt thought were the most loyal to them had voted and fled. There were no arms left to twist.

"The market's down more than 600 points -- 700, 800? What's it going to take?" screamed Rep. Joseph Crowley (D-N.Y.). Pelosi hushed him. He threw down his whip count papers and cursed.

Rep. Ellen O. Tauscher (D-Calif.) gaveled the vote shut and announced the bill's defeat. Frank had told the leadership that he did not want a long vote with lots of threats and cajoling, given the public's overwhelming opposition.

"It would have been a terrible mistake to put this through. It would have been scandalous," he said yesterday.

'Fear in People's Eyes'

That night, Senate Majority Leader Harry M. Reid (D-Nev.) met with his leadership amid rising concerns that House Democrats would try again, this time with a more liberal bill -- possibly with an extension of unemployment benefits, funding for infrastructure projects and long-sought bankruptcy rule changes -- that could win overwhelming Democratic support. That measure would almost certainly be filibustered in the Senate, he decided.

The next morning, Reid put it to Sens. Richard J. Durbin (D-Ill.), Christopher J. Dodd (D-Conn.), Kent Conrad (D-N.D.) and Max Baucus (D-Mont.): What if the Senate moves fast, with the basic rescue bill, coupled with a package of expiring business and energy tax breaks and another one-year patch for the alternative minimum tax? There were qualms, but Reid began working the phones, first calling Senate Minority Leader Mitch McConnell (R-Ky.), then Democratic leaders and White House Chief of Staff Joshua B. Bolten.

Shortly after 7 that night, to a near-empty Senate chamber, Reid and McConnell announced they would bring up the bailout-tax bill the next day. Such controversial moves almost always take unanimous consent, but nobody was there to object.

At Treasury and on K Street, the House defeat knocked home a central point -- the message that the rescue plan would help the economy writ large was not getting through. The Securities Industry and Financial Markets Association began a furious round of conference calls to rope in the American Bankers Association, the Mortgage Bankers Association and the Independent Community Bankers of America. The lobbyists agreed that lawmakers needed to hear from their constituents, not Wall Street or K Street. Auto dealers, AARP and manufacturers all joined in the effort.

It worked. Twice, the mayor of Chattanooga, Tenn., called Wamp, a "no" vote Monday, from Germany to tell him that Eastern Tennessee's triumphant win of a Volkswagen plant was at risk of collapse. Mark Vitner, an economist with the failing Wachovia Bank, told Myrick: "I have never seen fear in people's eyes that I see now, except when I was in the World Trade Center on 9/11."

Rep. K. Michael Conaway (R), a certified public accountant, headed home Monday to his West Texas district initially to back-slapping way-to-go's from constituents excited by his opposition.

But he spent the next day at Kermit High School, where even the students had some basic knowledge of what had happened in Washington. As Conaway explained the nature of the credit crunch to a class of seniors, a hand rose in the back of the room.

"Does this mean I can't get a college loan next year?" the student asked.