It was a stunning defeat that sent shock waves throughout markets worldwide. U.S. House lawmakers voted 228-205 to reject a $700 billion emergency rescue plan for the nation's financial system.

Many Democrats voted for the plan, but most Republicans voted against it.

All three South Bend area Congressmen voted in favor of the bailout. "The rescue plan was not perfect, but it was necessary," said Rep. Joe Donnelly (D-South Bend). "And while no one took any pleasure in voting for it, the alternative — doing nothing — is potentially disastrous and therefore unacceptable."

"Failure to act in the throes of crisis further puts those working families, who are already struggling to get by, at risk," said Rep. Fred Upton (R-St. Joseph, MI).

"I hope people can realize that our house is on fire and we need to get control of this fire before it burns us all down and I hope we can do that Thursday," said Rep. Mark Souder (R-Ft. Wayne).

Rep. Pete Visclosky (D-Valparaiso), Rep. Mike Pence (R-Columbus) and Rep. Dan Burton (R-Indianapolis) all voted against the bill, joining other lawmakers in ignoring urgent warnings from President Bush and Congressional leaders that the economy could nose dive without the plan.

Both Democratic and Republican leaders pledged to try again. "The legislation has failed, but the crisis has not gone away," said House Speaker Nancy Pelosi (D-California). "We must work in a bi-partisan way."

But, even with promises that work to pass the bailout plan would continue, the vote sent the nation's financial markets into a tailspin.

The Dow Jones Industrial Average posted its biggest one day loss ever, dropping 777 points by the closing bell. Investors made it clear they had bet heavily on the bailout passing; leaving the future of the markets uncertain.
But the move also left some Americans' financial futures in limbo too.

"Pension money is definitely going to go down because the markets are going to be very unstable," said St. Mary's College Business and Economics Professor Dr. Michael Robinson.

Some are bracing for the impact.

"It's affecting our retirement savings, absolutely," said Jim Bush, of Granger. "I'm making some moves to protect myself." Others have already seen their retirement date begin to slip away.

"It's pushed me back a few years just in the last few days," said Greg Fye, of South Bend. And some experts say you could soon feel the impact too, even if your retirement date is decades away.

"I think we've certainly moved into an area where the threat to the economy is much greater than it was by virtue of this [bailout bill] not happening," said South Bend based Wachovia Securities Financial Advisor Ed Jordanich. "[That affects people who don't even have investments on Wall Street]."
It could affect your bank too.

For weeks, experts had said local banks wouldn't be hit by the Wall Street meltdown, or the huge hits investment banks were taking in New York. But now, some aren't so sure commercial banks aren't at risk too.

"It could trickle down," said Dr. Robinson. "Because [some regional and local banks] did make some bad mortgages too—not to the degree that the large investment banks like Bear Stearns or Lehman Brothers did. But some of them could be in trouble too."

That's mainly a problem for the institutions themselves, and— because of the Federal Deposit Insurance Corporation, or FDIC— it shouldn't affect your money.

The FDIC insures all deposits up to $100,000. But it will affect your credit.

Because of the uncertainty fueled again by Monday's failed House vote, the credit markets continued to freeze up. That means banks aren't lending to each other, or to you.

"Without credit, everyone will be affected," said Dr. Robinson. "It's going to be difficult to borrow. The economy will get worse. Housing problems will get worse until some long term solution is found. I think this will be systemic. It's going to hit everybody. There's just no way to get out of this."

Another worry?

That more investment banks fail, or— in the case of Wachovia itself on Monday morning— that banks are gobbled up by outside investors. Wachovia—the nation's 4th largest bank—sold its assets to Citigroup for about $2 billion, after bad mortgages sent it spiraling toward bankruptcy.

The move does not affect Wachovia's Securities branch, which many Americans use to manage their retirement funds. It also does not affect customer accounts, and won't cost taxpayers a dime. But, following a similar sellout of Washington Mutual Bank last week, it was another sullen sign for investors.

"You put all these things together in the stew, and, uncertainty is the word," said Jordanich. The biggest unanswered question: can America's financial ship keep sailing without help?

It's a bet some on Capitol Hill are banking on. And because of that, Robinson says, we may have no choice but to find out.

"What will happen with no bailout? I think we may have to wait until the next administration to find out," he said. "What I am sure of, is that the problem is getting worse, and it's going to take longer to fix it. I think we're talking beyond months now. We may be talking several years now. But, this will not play out by itself. It will get worse."

President Bush met with his economic advisers Monday night to discuss the next step, and House leaders will reconvene their session on Thursday instead of adjourning for the year as planned.

as early as Wednesday.