The stunning rejection by the US House of Representatives of the Bush Administration’s $700 billion financial rescue package was the result of a catastrophic miscalculation by leaders of both parties – and the White House – all of whom believed that they had enough votes to pass the Bill.

The Republican and Democratic leaderships, together with President Bush, dramatically underestimated the number of Congressmen and women from both parties who were not going to back a Bill that is deeply unpopular with voters, five weeks before they face reelection.

They had failed to anticipate a massive revolt by conservative Republicans – who loathe the idea of government intervention on such a massive scale – and liberal Democrats, opposed to any kind of relief for the titans of Wall Street. Of the 435 members in the House, 133 Republicans voted against the Bill, as did 95 Democrats.

Republicans immediately lined up to blame Nancy Pelosi, the Democratic Speaker of the House, for the 228 to 205 defeat. They railed against what they claimed was an aggressive, partisan speech from her seconds before the vote, which they said caused wavering conservatives to defect and block the Bill.

In a sign that he suddenly realised that things were going horribly wrong, John Boehner, the Republican leader in the House, became emotional during a speech minutes before the vote. Conceding that the Bill was in “serious doubt”, he implored his colleagues to cast aside politics – and consider the possibility of endangering their own political futures – by voting yes.

“We could have got there, was it not for this partisan speech by the Speaker of the House,” Mr Boehner said afterwards. He said that it had poisoned his caucus and “caused a number of our members to go south”. Yet he vowed to keep working to get a Bill passed.

Mrs Pelosi had heralded the bipartisan nature of the Bill, but then went on to talk about the failed policies of the past eight years and a new Democratic-led future next year. Steny Hoyer, the Democratic House majority leader, called the Republican accusations absurd. Mrs Pelosi said: “The Democratic side more than lived up to their side of the bargain.”

Despite barely getting a majority of Democrats to back the Bill, she laid its failure squarely on Republicans.

But Paul Ryan, a Republican member of the House, came closest to expressing the dilemmas of the average Congressman. “We’re all worried about losing our jobs,” he said 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’.”

Within seconds of yesterday’s vote the Dow had plunged 500 points and a panicked Mrs Pelosi announced that she was holding the vote open – so that the 13 “no” voters needed to get the legislation passed could be persuaded to change their minds. But ten minutes later only two had been found and the vote was closed. Henry Paulson, the exhausted Treasury Secretary who hammered out what he believed was a deal during a marathon negotiation session with party leaders on Saturday, started telephoning them again to try to get a new vote.

Aides to Mrs Pelosi said that another vote could take place on Thursday. Much now lies in the hands of James Clyburn and Roy Blunt, the Democrat and Republican whips.

President Bush expressed disappointment over the vote in Congress. “We put forth a plan that was big because we’ve got a big problem,” he said. “Our strategy is to continue to address this economic situation head-on and we’ll be working to develop a strategy that will enable us to continue to move forward.”

The defeat was all the more stunning because the plan had been backed by leaders of both parties in the House, by Mr Bush, by both Barack Obama and John McCain, and even by some conservative Republicans who had scuppered a deal last Thursday.

The overriding question for leaders on Capitol Hill was what to do next. Congress has been trying to adjourn so that its members can campaign for the November 4 elections. Yet with 36 days until election day, there was no clear indication last night of whether Congressmen would be kept in Washington.

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