Treasury’s $700 billion Wall Street rescue plan collapsed in the House, sending a shock through financial markets and leaving the Bush Administration scrambling to find some new way to deal with the credit crunch facing the American economy.

“I don’t know that we have the path forward at this point,” House Minority Leader John A. Boehner (R-Ohio), who pushed hard for the bill, said after the vote. “We need everyone to calm down.”

Republican defections proved fatal to the massive government intervention, rejected 228-205. Despite bipartisan appeals from the leadership, anti-Wall Street sentiment and the huge scale of the proposed government intervention proved too much for Treasury to prevail.

Democrats more than delivered a majority of their caucus, and Speaker Nancy Pelosi (D-Cal.) held the vote open to bring her numbers up to 140 votes for the package. But Republicans never topped 70, and the final GOP split was 133 against the bill and only 65 for the measure.

Nonetheless there were immediate recriminations on both sides. A switch of just 12 members would have reversed the outcome, and 95 Democrats, many the left wing of the party, contributed to the defeat.

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