Bailout bill passes the House; Market tanks anyway

As expected, the $700 billion bailout bill has passed the House of Representatives in its second go-around. The vote was 263 "for" to 171 "against."

The Federal Reserve, for its part, is "applauding" the move. Here is the statement it just released:

"I applaud the action taken by the Congress. It demonstrates the government's commitment to do what it takes to support and strengthen our economy. The legislation is a critical step toward stabilizing our financial markets and ensuring an uninterrupted flow of credit to households and businesses.

"The Federal Reserve will continue to work closely with the Treasury as it undertakes these new initiatives. We will continue to use all of the powers at our disposal to mitigate credit market disruptions and to foster a strong, vibrant economy."

Treasury Secretary Henry Paulson has chimed in as well, saying:

"By acting this week, Congress has proven that our Nation's leaders are capable of coming together at a time of crisis, even at a critical stage of the political calendar, to do what is necessary to stabilize our financial system and protect the economic security of all Americans."

If policymakers were expecting this bill to lead to a huge rally, they got a dose of cold reality in the afternoon. A 310-point rally (at the intraday high) in the Dow turned into a 157-point loss at the close.