The U.S. House of Representatives rejected on Monday legislation designed to rescue the nation’s troubled financial system. After three hours of debate on Capitol Hill, the shock vote of 228-205 against the measure sent the markets almost instantaneously into convulsions. The Dow Jones Industrial Average plunged 700 points - one of its biggest drops ever. The panic extended to global markets. Brazil’s Sao Paulo stock market plunged 10% and suspended operations. Canada’s S&P/TSX slid 7.1% and Mexico’s Bolsa tumbled 6.2%. Worldwide financial markets had slumped even before the House vote; shares in Hong Kong closed down 4% and in Paris and London they were down 3%. The rejection of the measure came as turmoil in financial markets widened, prompting the Federal Reserve to inject new capital in response to continued strains in short-term funding. In terms of Foreign Exchange Swap Lines - the Federal Open Market Committee authorized a $330 [More...]