The financial markets rescue plan put forth by Secretary Henry Paulson and largely backed by House and Senate Democratic leadership failed miserably to pass muster on the House floor during its first vote yesterday.

Republicans and Democrats alike voted down the measure on a variety of grounds, mostly involving a number of missing key elements and the procedures used to get the bill to the floor in an expedited manner.

Following the failed vote, the Dow Jones Industrial Average (DJI) fell, eventually closing -777.68, the biggest single day drop, though not the biggest by percent. Still, when you look at the beginnings of this liquidity crisis, the markets have dropped significantly from an all-time high in May to present figures, losing more than 30% of value. While this is a gradual decline, it is nevertheless not one taking years, but months, reflecting the state of technical depression we’ve been writing about since January.

Yesterday, in failing to pass the legislation, Congress assumes responsibility for more than $1.2 Trillion (yes, we said Trillion with a “T”) in market capitalization. That equates to losses to every investor, not merely the “Wall Street fatcats” as some on Capitol Hill would say, but the little investors, the people in their districts who put money directly into accounts with brokerage houses or who invest through retirement funds, pensions, and other means. In case you didn’t notice it, that’s nearly double the cost of the Paulson Bill.

The Paulson Bill is hardly perfect and Congressional leadership realizes it, but also knows that the time is not available to craft the kind of strong legislation that’s needed to get it perfect. That doesn’t mean to say that Congress cannot revisit this later and make corrections and additions to satisfy the greater good. However, that greater good was not served yesterday with a negative vote.

We agree with both Democrats and Republicans who expressed strong concern about the lack of language on mark-to-market issues, lack of solid oversight, lack of free market interests, etc. However, this is not the time to fine tune it, but to get the message out to the world, loud and clear, that passage and rescue of our financial institutions is critical to absolutely every American.

Should mark-to-market be changed? Absolutely! It is a major drain not only on the banking institutions but also on communities as it devalues property and reduces the tax base of communities around the country. Its implementation by regulators is wrong and that needs to be corrected. However, that correction can and should be done under separate legislation, and indeed, by executive order of the President.

Is there sufficient oversight in the bill? Not really, but it is considerably better than when first proposed and because of the tranches set forth in the bill, Congress has time to act to add more oversight for the second half of the asset purchases, while giving the Treasury authority to step in and act to ease our current crisis.

Will this bill work? Maybe. We have our doubts too, as today is the end of most companies’ fiscal year and in the ensuing weeks, earnings reports will be coming forth that are expected by many to be bad. Only the reports themselves will show how bad. Those reports, plus government reports on labor, foreclosures, etc. will probably drive markets south again. Without a rescue plan, probably down into the thousands, not hundreds.

For more than a year now, we’ve been sponsoring legislation that would create loan evaluations, whether in the form of business plan review and scoring or mortgage analysis. We believe these to be absolutely critical to ensuring that loans are qualified. We share the concern of many on Capitol Hill, that when liquidity is re-established in the credit markets and banks, bad loans will once more, be made in abundance and sold in packages, this time with the potential of going to taxpayers, rather than investors. That being said, we are not pushing our extremely important legislation, but waiting for the Paulson Bill to be passed.

While some have made the argument that there was too much partisan politics on the floor, that pendulum swings both ways and the public realizes, full well, which party was in control for the past decade plus. It is unwise, politically to bicker over partisan platforms and to change votes on things said by any other member. Representation is for the people, not the individual member and their job, respectfully, is to vote for the greater good, not personal opinion.

We urge Members of Congress to be tolerant, patient and to accept that the passage of the Paulson Bill is emergency care for a patient clearly in dire need.

Get out the vote and support this rescue plan!