Financial Markets in Crisis: Rescue Bill Fails in House

September 29, 2008

The Gibson, Dunn & Crutcher Financial Markets Crisis Group is tracking closely government responses to the turmoil that has catalyzed dramatic and rapid reshaping of our capital and credit markets.

What follows is our latest in a series of updates on key regulatory and legislative issues.

Bipartisan Rejection

Lawmakers labored over the weekend to craft a financial package that would be palatable to both Democrats and Republicans, as well as to constituents back home.  Draft legislation was circulated and tinkered with all weekend until the House Rules Committee, at 12:01 a.m. this morning, reported to the House a rule setting the parameters of the debate on the rescue legislation.

Bipartisan House and Senate negotiators had reached agreement on what they believed to be a consensus bill.  But when it came time to vote, members from both sides of the aisle jumped ship, defeating the legislation by a 205-228 vote.[1]  The vote reflected strong bipartisan opposition to the rescue plan as 95 Democrats and 133 Republicans opposed the measure.

Democrats are blaming Republican leadership for not producing enough votes; Republicans are blaming Democratic House Speaker Nancy Pelosi for stirring dissension in the Republican ranks with a partisan floor speech.

Reacting quickly to the news, stocks plummeted and the Dow Jones Industrial Average dropped 780 points.

It is not clear what happens next, but it is likely that the House will reconsider the measure – likely with some changes designed to attract more support — again this week.  After the vote, both the Administration and House Democratic leadership expressed their intent to find a way to move forward with the measure.

The House has recessed until noon on Thursday for Rosh Hashanah.

  [1] For a full listing of House members’ votes, see

Gibson, Dunn & Crutcher LLP

Gibson Dunn has assembled a team of experts who are prepared to meet client needs as they arise in conjunction with the issues discussed above.  Please contact Michael Bopp (202-955-8256, in the firm’s Washington, D.C. office or any of the following members of the Financial Markets Crisis Group:

Public Policy Expertise
Mel Levine – Century City (310-557-8098,
John F. Olson – Washington, D.C. (202-955-8522,
Amy L. Goodman
– Washington, D.C. (202-955-8653,
Alan Platt – Washington, D.C. (202- 887-3660,
Michael Bopp – Washington, D.C. (202-955-8256,

Securities Law and Corporate Governance Expertise
Ronald O. Mueller
– Washington, D.C. (202-955-8671,
K. Susan Grafton – Washington, D.C. (202- 887-3554,
Brian Lane – Washington, D.C. (202-887-3646,
Lewis Ferguson – Washington, D.C. (202- 955-8249,
Barry Goldsmith – Washington, D.C. (202- 955-8580,
John H. Sturc
– Washington, D.C. (202-955-8243,
Alan Bannister – New York (212-351-2310,

Financial Institutions Law Expertise
Chuck Muckenfuss – Washington, D.C. (202- 955-8514,
Christopher Bellini – Washington, D.C. (202- 887-3693,
Amy Rudnick – Washington, D.C. (202-955-8210,

Corporate Expertise
Howard Adler – Washington, D.C. (202- 955-8589,
Richard Russo – Denver (303- 298-5715,
Dennis Friedman – New York (212- 351-3900,
Stephanie Tsacoumis – Washington, D.C. (202-955-8277,
Robert Cunningham – New York (212-351-2308,
Joerg Esdorn – New York (212-351-3851,
Stewart McDowell – San Francisco (415-393-8322,
C. William Thomas, Jr.
– Washington, D.C. (202-887-3735,

Real Estate Expertise
Jesse Sharf – Century City (310-552-8512,
Alan Samson – London (+44 20 7071 4222,
Andrew Levy – New York (212-351-4037,
Dennis Arnold – Los Angeles (213-229-7864,
Andrew Lance – New York (212-351-3871,

Crisis Management Expertise
Theodore J. Boutrous, Jr. – Los Angeles (213-229-7804,

Bankruptcy Law Expertise
Michael Rosenthal – New York (212-351-3969,

Tax Law Expertise
Arthur D. Pasternak – Washington, D.C. (202-955-8582,
Paul Issler – Los Angeles (213-229-7763,

Executive and Incentive Compensation Expertise
Stephen W. Fackler – Palo Alto (650-849-5385,
Michael J. Collins – Washington, D.C. (202-887-3551,
Sean C. Feller – Los Angeles (213-229-7579,

© 2008 Gibson, Dunn & Crutcher LLP

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