The House on Monday defeated a $700 billion emergency rescue package, ignoring urgent pleas from President Bush and bipartisan congressional leaders to quickly bail out the staggering financial industry.

Stocks started plummeting on Wall Street even before 228-205 to reject the bill was announced on the House floor.

As the vote was shown on TV, stocks plunged, and investors fled to the safety of the credit markets on fears that the financial system would keep sinking under the weight of failed mortgage debt.

The Dow fell 705 points, then regained some ground to trade down 462 at 10,681.

Even as the electronic roll call in the House began, Democratic and Republican leaders were uncertain about having enough votes to pass the politically unpopular plan. It’s the most sweeping government intervention in markets since the Great Depression.

The bailout puts in place an unprecedented federal program to buy up rotten assets from cash-starved firms. The goal is to free up choked credit that was threatening to cause broader market turmoil.

The 110-page bill that was before the House on Monday and up for a Senate vote as soon as Wednesday contained key measures demanded by both parties. Among them: curbs on executive pay, an oversight board and a chance for taxpayers to share if there are gains.

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