Update (5:20 p.m.): "Now it's time for all members of Congress to go back to the drawing board," John McCain said in remarks on the failure of the bill today.
He made a pretty strong statement in favor of a bailout, echoing the idea that it was necessary for American families to stay prosperous.
But he couldn't help himself from seeking political advantage, blaming the Democrats for the bill's failure. "Barack Obama and his allies in Congress infused unnecessary partisanship into the process. Now is not the time to fix the blame," he said as he fixed the blame in the most partisan manner imaginable.
Update (4:45 p.m.): Hank Paulson, looking shaken by recent events, just stepped out on to the White House lawn to say that while he is working with his fellow regulators and using all the tools available to protect the markets, the "tookit we have is not sufficient." He too described himself as "very disappointed" with the failure of the bailout bill.
Update (4:20 p.m.): So what happens next? Some hints might come in a conference call this afternoon with the McCain campaign's senior economics adviser, Doug Holtz-Eakin. It begins at 4:45. The call in number is 888-820-8957, pass code: McCain-Palin.
Update (4:10 p.m.): CNBC's Steve Liesman says congressional staffers are telling him there won't be a new vote on the bailout until Thursday.
Update: (3:42 p.m.): "We put forth a plan that was big because we got a big problem," Bush just said, sitting in a chair placed before a fireplace in the White House. He's meeting with advisers, he said. "I'm disappointed with the vote in Congress," the president said.
Was that his version of FDR's famous fireside chats? Bush looked annoyed he was being bothered with this stuff.
Update (3:35 p.m.): A White House spokesman says President Bush is "very disappointed" about today's bailout failout.
Bush is expected to make a public statement from White House before the market closes.
Update (3:30 p.m.): A high-level meeting is taking place this afternoon at the White House, as top Treasury Department officials, including Hank Paulson, meet with the president, according to people familiar with the matter. We also hear that Fed chair Ben Bernanke will be attending the meeting. The purpose of the meeting is to decide what actions might be necessary to calm markets following the failure of the bailout bill in the House of Representatives today.
Update (3:00 p.m.): The House voted against the bailout, with the bill falling short by a dozen votes. Both parties are blaming each other for the failure. Ironically, that is a sign that a bailout may eventually pass.
The Republicans immediately went to the media claim Democratic partisanship doomed the bailout. They said that House Speaker Nancy Pelosi's speech on the floor, which claimed credit for rescuing the economy for Democrats and blasted Republicans for their resistance, drove away Republican votes.
This is actually a signal that the Republicans remain open to passing a bailout, perhaps with modified terms and if the Democrats avoid making this a partisan battle. If the bill failed over rhetoric and politics, rather than a substantive objection to the bill, the House members should be able to find a way to make up and pass the bill.
The Democrats may not be in the mood to tone down their partisan rhetoric. Barney Frank is throwing a fit, sources on Capitol Hill say. He has reportedly said that it's now up to the GOP to present an alternative.
In her remarks following the defeat of the bill Pelosi blamed the Republican leadership for not living up to a promise she alleged they made to deliver half of the Republican vote in favor of the measure.
A major quesiton is whether the House will now adjourn, as it planned. Our sources say adjournment is unlikely at this time. A vote on a revised bailout is likely to come later this week.
Update (2:08 p.m.): Is it over? The House is now voting on other measures. CNBC's John Harwood says his sources say there is now no change this bill will pass today.
In the initial voting the bailout fell short by over a dozen votes from what it needed to pass in the House of Representatives today, shocking the market and Capitol Hill insiders.
House members, however, can change their votes until the vote has closed, according to a source on the Hill. Right now serious arm-twisting is getting down on the House floor, as the House leadership pushes to get members to change their vote and get the measure passed.
Update (2:01 p.m.): It's clear that the House leadership has decided to hold open the vote while they attempt to wrangle more votes to pass the bailout bill. Right now the vote count stands at 206 in favor and 227 against, as it has for several minutes. A switch of just 11 votes would be enough to carry the measure.
In 2005, Republicans held the votes open for a bill meant to provide assistance following Hurricane Katrina for almost an hour, so there is precedent for this.
Update (1:55 p.m.): Republicans and Democrats are locked in a fight on the House floor. Republicans supplied fewer votes than Democrats had expected, convincing Democrats to vote against the bailout bill so as not to put their seats at risk. Both parties are now negotiating vote trading, with the Democrats arguing the Republicans should get at least 9 more of their members to vote "Yea," bringing the Republican favorable votes up to signficiantly. At issue, many on the Hill believe, how many seats each party should put at risk by voting for this deeply unpopular bailout.
Update (1:45 p.m.): Talk about coming down to the wire! The official time has expired, although votes are still being tallied, and right now the "Nays" lead with 208 votes to 189. They need almost all the votes left to reach the number to pass this!
The Dow is down 570 points!
Update (1:40 p.m.): With less than three minutes of scheduled voting left, the vote is current 162 in favor, and 167 against.
Earlier: Despite plans to conclude the vote by noon today, which were later pushed back to one p.m., the voting on the bailoot bill did not begin in the House of Representatives until nearly 1:30 p.m. We're told by sources on Capitol Hill that there was some last minute vote-wrangling aimed at increasing Republican support for the bill.
The bill needs 218 votes to pass, which it should easily get. Supporters had hoped to garner as many as 80 votes from Republicans in order to make the bill appear as a bipartisan measure. In the first few minutes of voting, with 10 minutes left, the bill had 122 votes for and 117 votes against. 80 Democrats and 32 Republicans had cast "yea" votes.
