In a vote that shook the government, Wall Street and markets around the world, the House on Monday defeated a $700 billion emergency rescue for the nation's financial system, leaving both parties' lawmakers and the Bush administration scrambling to pick up the pieces. Dismayed investors sent the Dow Jones industrials plunging 777 points, the most ever for a single day.

Pelosi Blasts Bush |Bush 'Disappointed' | Frank Scolds GOP

The Dow Jones Wilshire 5000 Composite Index recorded a paper loss of $1 trillion across the market for the day, a first.

"We need to put something back together that works," a grim-faced Treasury Secretary Henry Paulson said after he and Federal Reserve Chairman Ben Bernanke joined in an emergency strategy session at the White House. On Capitol Hill, Democratic leaders said the House would reconvene Thursday, leaving open the possibility that it could salvage a reworked version.

Senate leaders showed no inclination to try to bring the measure to a vote before they could determine its fate in the House.

All sides agreed the effort to bolster beleaguered financial markets, potentially the biggest government intervention since the Great Depression, could not be abandoned.

But in a remarkable display on Monday, a majority of House members slapped aside the best version their leaders and the administration had been able to come up with, bucking presidential speeches, pleading visits from Paulson and Bernanke and urgent warnings that the economy could nosedive without the legislation.

In the face of thousands of phone calls and e-mails fiercely opposing the measure, many lawmakers were not willing to take the political risk of voting for it just five weeks before the elections.

The bill went down, 228-205.

The House Web site was overwhelmed as millions of people sought information about the measure through the day.

The legislation the administration promoted would have allowed the government to buy bad mortgages and other sour assets held by troubled banks and other financial institutions. Getting those debts off their books should bolster those companies' balance sheets, making them more inclined to lend and ease one of the biggest choke points in a national credit crisis. If the plan worked, the thinking went, it would help lift a major weight off the national economy, which is already sputtering.

Hoping to pick up enough GOP votes for the next try, Republicans floated several ideas. One would double the $100,000 ceiling on federal deposit insurance. Another would end rules that require companies to devalue assets on their books to reflect the price they could get in the market.

In the meantime, Paulson said he would work with other regulators "to use all the tools available to protect our financial system and our economy."

"Our tool kit is substantial but insufficient," he said, indicating the government intended to continue piecemeal fixes while pressing Congress for broader action.

Stocks started plummeting on Wall Street even before Monday's vote was over, as traders watched the rescue measure going down on television. Meanwhile, lawmakers were watching them back.

As a digital screen in the House chamber recorded a cascade of "no" votes against the bailout, Democratic Rep. Joe Crowley of New York shouted news of the falling Dow Jones industrials. "Six hundred points!" he yelled, jabbing his thumb downward.

The final stock carnage far surpassed the 684-point drop on the first trading day after the Sept. 11, 2001, terror attacks.

Bipartisanship Over

House Democrats and Republicans threw bipartisanship to the wind Monday after failing to pass the behemoth bailout package. Their nominees for the White House told them all to get back to work.

"One of the messages I have for Congress: Get it done," Sen. Barack Obama said. "Today, Democrats and Republicans in Washington have the responsibility to make sure that an emergency rescue package is put forward that can at least stop the immediate problem we have."

"I share the anger and frustration" over the failure of the bill to pass, Sen. John McCain, Obama's Republican rival, said to a gathering of reporters in Iowa. "It's time for all members of Congress to go back to the drawing board."

Before the vote, Obama and McCain said they had hoped to return to Washington for a scheduled Wednesday Senate vote on the measure. But with the House not scheduled to try again on a bailout vote until Thursday, the Senate's schedule is up in the air.

"No" votes came from both the Democratic and Republican sides of the aisle. More than two-thirds of Republicans and 40 percent of Democrats opposed the bill. But only minutes after the vote, Republicans blamed Pelosi's scathing speech near the close of the debate, which attacked Bush's economic policies and a "right-wing ideology of anything goes, no supervision, no discipline, no regulation" of financial markets, for the vote's failure. (Video: Pelosi Blasts Bush.)

Rep. Roy Blunt, R-Mo., the minority whip, estimated that Pelosi's speech changed the minds of a dozen Republicans who might otherwise have supported the plan. (Video: GOP Blames Pelosi.)

But a core group of Republicans had argued since the bailout proposal was announced last week that they were opposed to it on principle; that that the federal government should not be interfering in the market, and that it should not be putting so much taxpayer money on the line to prop up toxic debt in the financial markets.

With that in mind, Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, shot back at Republicans that, "Because somebody hurt their feelings, they decided to punish the country." (Video: Frank Scolds GOP.)

More than a repudiation of Democrats, Frank said, Republicans' refusal to vote for the bailout was a rejection of their own president.

What's Next For Bailout Package?

The overriding question Monday night was -- what to do next.

"The legislation may have failed; the crisis is still with us," Pelosi said in a news conference after the defeat. "What happened today cannot stand."

Republican leader John Boehner, R-Ohio, the minority leader, said he and other Republicans were pained to back the measure, but in light of the potential consequences for the economy and all Americans, "We need to renew our efforts to find a solution that Congress can support."

Sen. Chris Dodd, D-Conn., said there was scant time to reopen legislation that was the product of hard-fought bipartisan negotiations.

"What happened today was not a failure of a bill, it was a failure of will," said Dodd, the Banking Committee chairman. "Our hope is that cooler heads will prevail, people will think about what they did today and recognize that this is not just scare tactics -- it's reality."

Lawmakers were under extraordinary pressure from powerful outside groups, which gave notice they considered the legislation a "key vote" -- one they would consider when rating members of Congress.

The U.S. Chamber of Commerce said opponents of the bailout would pay for their stance.

"Make no mistake: When the aftermath of congressional inaction becomes clear, Americans will not tolerate those who stood by and let the calamity happen," said R. Bruce Josten, the Chamber's top lobbyist, in a letter to members.

The conservative Club for Growth made a similar threat to supporters of the bailout.

"We're all worried about losing our jobs," Rep. Paul Ryan, R-Wis., declared in an impassioned speech in support of the bill before the vote. "Most of us say, 'I want this thing to pass, but I want you to vote for it -- not me."'

"We're in this moment, and if we fail to do the right thing, Heaven help us," he said.

If Congress doesn't come around on a bailout, more pressure would fall on the Federal Reserve.

The Fed, which has been providing billions in short-term loans to squeezed banks to help them overcome credit stresses, could keep expanding those loans to encourage lending. And, it could keep working with other central banks to inject billions into financial markets overseas.

It also has the power to expand emergency lending to other types of companies and even to individuals if they are unable to secure adequate credit.