The public had so little stomach for bailing out Wall Street that the People's House rose up and said no -- narrowly but loud and clear. Now America's political and financial systems, and the public, are left to figure out what to do next.

Rather than a free-fall to the crisis' "natural bottom," which some conservatives endorse, the better answer remains renewed negotiations, serious rethinking and a revote. Something like the rescue plan voted down yesterday still represents the best and most practical path to a turnaround.

True, it involves putting up an immense amount of money, and even then it may not work -- but then again it might. And the final cost may not be anywhere near the advertised $700 billion price tag. A partly or fully recovered economy would do wonders for housing values, and for the value of the troubled mortgage-based securities that are at the core of the credit crunch. Avoiding a recession or depression is practically priceless.

The current plan, at heart, aims to inject a healthy dose of confidence into the banking system, confidence that banks will have money to lend and that they will be repaid. Despite widespread indignation -- hey, we're all mad -- at fat cat Wall Streeters, irresponsible lenders and spendthrift borrowers, that remains the most likely route out.

Bailout blues

But it's a tough vote for lawmakers who've heard an earful. Faced with grass-roots disgust at financial big shots' colossal failures -- and princely paychecks -- House members left, right and center preceded their votes with many an "I hate to do this, but...."

If, as Republicans charge, partisan comments by House Speaker Nancy Pelosi led key conservatives to bail out on the bailout yesterday afternoon, then they, and she, should swallow their pride. This would be a good time to put "country first."

And whatever is done needs to be done quickly. America can't stand many more days like Meltdown Monday.

As if to underscore the seriousness of the situation, North Carolina's proud old Wachovia bank, infected with poisonous subprime mortgages after its ill-fated acquisition of a California mortgage lender, completed what The Wall Street Journal called "one of the most stunning downfalls in modern U.S. banking history." Wachovia's banking units are being sold to New York's Citigroup. First word is that Charlotte will remain as headquarters for those operations, but don't bet the house.

Stock markets tanked -- the Dow finished down nearly 800 points -- and international investment is in danger of drying up. Other banks are in line to collapse. The U.S. economy, which has narrowly staved off a recession (as officially defined) seems about to slip over the line.

Infuse this

Over the weekend President Bush and administration officials had worked to shore up support for Treasury Secretary Henry Paulson's plan to rescue troubled banks and the wider financial system. Republican and Democratic negotiators added and subtracted provisions.

In particular, they bowed to the wishes of conservatives in the House, whose free-market objections to a massive infusion of taxpayer cash reflected both their ideological bent and popular discontent. So they added a private market insurance provision for troubled assets that banks can use. There also were limits on executives' golden parachutes, and measures to assist homeowners with troubled loans (but no provision to make bankruptcy-court changes to mortgage terms -- another nod to the GOP).

Setting aside arguments about what got us here -- too many regulations or too few -- doing little or nothing carries all the risk of a sliced-and-diced mortgage-backed security. Strong and targeted governmental actions in financial crises have succeeded before, notably in the case of the Resolution Trust Corp. and its handling of the savings and loan crisis. There is reason to think this rescue could work as well.

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