Neither fear nor anger are effective economic policies — yet those seem to have been the dominating considerations in the House's rejection Monday of legislation allowing the federal government to absorb risky mortgage securities and reassure credit markets.

The vote was narrow — 205-228 against the measure. Nearly two-thirds of Republicans voted against the plan, as did about two-fifths of House Democrats. They were responding to overwhelming pressure from taxpayers angry they'll have to assume the risk of bailing out Wall Street investment houses from the consequences of their poor judgment. House members face election in five weeks, and they don't want to explain a vote supporting the $700 billion bailout.

We get that. But we also note that the impact of their cowardice was a 777-point decline in the Dow Jones Industrial Average stock index at the close of trading Monday. The unhappy fact is that Wall Street is intertwined with Main Street. It was the retirement savings accounts of everyday Americans that were savaged as the Dow tumbled. And the rest of the week promises to be equally brutal.

Here's something Congress can count on — if the collapse of the markets continues, voters will hold them accountable, no matter how they voted on the bailout. If Americans stick their debit cards into ATM machines and nothing comes out, members of Congress will have to explain why they did nothing to help.

Those who opposed the reasonable deal negotiated by leaders from both parties must suck it up and change their vote, and they must do it this week. Congress can't adjourn as planned Thursday if the nation still is on the precipice of an economic collapse.

House Speaker Nancy Pelosi, D-Calif., and Minority Leader John Boehner, D-Ohio, must each deliver six additional votes to get this measure passed. That will require an end to the partisan gamesmanship exhibited by Pelosi in an anti-Republican tirade just before the vote and a stronger effort by President George W. Bush to deliver his own party's votes in support of his administration's bill.

This crisis stems from a lack of liquidity in the markets. Large investment houses and the two major government-sponsored mortgage entities, Fannie Mae and Freddie Mac, bought, repackaged and resold mortgage-backed securities, but in too many instances, the underlying mortgages were unsound. Nobody knows just how bad the situation is, but everyone agrees that it is extremely serious.

Major investment houses such as Bear Stearns and Lehman Brothers have disappeared. Some commercial banks have been absorbed by larger, more solvent banks, and others are wobbling and may fall this week. The uncertainty has caused a credit freeze, and as retired Michigan banking consultant Justin Moran notes, "Our economy runs on credit."

The purpose of the bailout is to move the bad mortgages off the balance sheets of banks and other financial firms so they will have confidence to lend money to each other again. The Federal Reserve is doing its part by pumping more money into the economy through the banking system to preserve the credit flow.

Moran contends that if the credit markets aren't reassured that there will be an orderly purchase and resale by the government of the mortgage securities, the housing market will become worse because it will be far too difficult to obtain mortgages. The same thing could happen to the auto industry if people can't get auto loans, he adds.

David Sowerby, a widely respected market analyst for Loomis Sayles in Bloomfield Hills, Mich., won't go that far, but he did say firms are already finding it harder to obtain working capital. The market as a whole reflects investor and consumer psychology.

Sowerby says we "have to eat the broccoli" of this bailout. "When people ask, 'is my cash safe? Is my 401(k) safe?,' we have to act. If the market doesn't like uncertainty, it really hates this uncertainty," he says.

There is an underlying value in these mortgage securities. The assets are tangible — houses and land. The mortgage loans on many of them may well have to written down, but if the government holds them and disposes of them in a systematic way, there is a decent possibility of recouping some if not all of the $700 billion the government is committing.

There is no ideal solution. It's unfortunate that taxpayers have been put in the situation of cleaning up a mess made by irresponsible Wall Street executives and a Congress that put its political agenda ahead of sound policy.

But that's where we are. Doing nothing is not a viable option, nor is it a responsible one.

REPRINTED FROM THE DETROIT NEWS.

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