The US House of Representatives has rejected the 700-billion-dollar plan in a moment of historic drama in the Capitol and on Wall Street.
The final vote on the final draft of the government bailout plan was rejected by 228 votes to 205 on Monday.
The plan, known as the Troubled Asset Relief Program, was hammered out by US lawmakers after a frenzied week of political twists and turns and negotiations with Senate leaders and the Bush administration.
The package was intended to ease anxiety over mounting losses tied to toxic assets by funding the Treasury Secretary with an initial $250 billion.
The vote was kept open minutes after the final countdown, while Democratic and Republican representatives attempted to change the minds of lawmakers who had voted against the bill.
The debate between leaders and rank-and-file members was heated and emotional up to the last minute.
The Republican and Democratic lawmakers who displayed stiff resistance to the bill rejected it as an undeserved aid package for high-flying financiers and a rush to economic judgment.
It is currently unclear how House leaders will address the financial crisis, however, they have vowed to try and bring the rescue package up for reconsideration as soon as possible.
As soon as the bill appeared to be going down to defeat, stocks on Wall Street began to plummet. Shares tumbled by nearly 700 points and then recovered some 100 points.
The vote had been preceded by an unusual lobbying by President George W. Bush and his team. The rejection of the bill left the president 'very disappointed'.
"There's no question that the country is facing a difficult crisis that needs to be addressed,'' said White House spokesman Tony Fratto.
Despite all-out efforts for the bill to be passed by Congress, investors around the world doubted that the financial plan would fully address the financial crisis.
The declines in New York were preceded by plummeting figures at the benchmark Hong Kong index and Tokyo's Nikkei.
MD/DA/HGH - PRESSTV