WASHINGTON - September 30 - The US House of Representatives met on Monday to vote on the proposed  $700 Billion bail out plan. By mid-day the house had rejected the proposal by a vote of 228 to 205. The rejection was a bipartisan affair with 133 Republicans and 95 Democrats voting against the plan.

The rejection by the House of Representatives of an emergency rescue plan for the nation's financial system ignited a fear-driven wave of selling in the stock market, sending shares into a tailspin. The Dow Jones industrial average tumbled almost 7 percent, or 777.68 points, its worst point drop in history.

The Real News spoke with Doug Henwood, founder and editor of the Left Business Observer to give his analysis of the day's events.  "The risk is quite high, the credit system has frozen up, the banks are afraid to lend money to each other. So far the impact on the real economy of this freeze up has been minimal, modest but I think it is going to get worse. If we start seeing a freeze up of regular lending activities, then we are going to be in deeper recession very soon. It's a scary thing. If this rejection survives this could mean paralysis times ahead."

Watch the full story on The Real News Network: Bailout Must Be Combined with Structural Reform