Political and financial observers were shocked Monday with the news that the House of Representatives failed to pass the so-called "bailout" of financial institutions that has been in the national focus for the past week.

All the national publications prior to the vote were referring to the agreement with the assumption that Congressional leaders had worked out the details and approval was basically a formality.

These are very complex issues that the "man in the street" doesn't fully understand and, if truth be told, perhaps that also might be the case with the presumed experts.

It is understandable that public opinion appears to be largely against the "bailout," with the prevailing view being that those who created the mess should not escape with a "slap on the wrist" and a blank check from the federal government.

But consider this fact -- while the bailout carried a maximum $700 billion price tag, Americans lost $1 trillion in their stock values in just one day -- the Monday that the measure was defeated. This shows us that sometimes a less-than-perfect solution is necessary. As said, perhaps Congressmen should hold their noses and vote yes.

Financial guru Warren Buffett has this to say about the need for the bailout plan -- "I understand where they're very mad about what's happened in the past, but this isn't the time to vent your spleen about that. This is the time to do something that gets this country back on the right track."

The original plan as presented by Treasury Secretary Henry Paulson was too simplistic in that it gave him unlimited power and a blank check for dealing with the crisis. Congressional leaders did step in and make revisions in the plan, most notably the need to provide safeguards for the taxpayer and at least some element of oversight. Did that make the plan perfect? Of course not, but most financial leaders continue to insist that some type of bailout is necessary to prevent financial meltdown in our society.

This could take the form of declining market values (as seen in the wholesale drop Monday) and the freezing of credit systems which will have a rippling effect on all forms of financial activity, including the loss of jobs.

There were, of course, a couple of weird political twists to the events on Monday, the strangest being that Sen. John McCain has been touring the nation patting himself on the back for working out the deal (while he claims Sen. Barack Obama is "sitting on the sidelines"), only to find that there is no deal -- especially on the Republican side.

The reality is that a Republican President told the nation that this action was necessary to avert a catastrophe and both Presidential candidates agreed -- and the Republican members of the House went against their own party leader.

Let's be honest -- McCain came across as looking foolish by touting his key role in making the deal happen -- and then there was no deal.

We also have to wonder about the Republican members of the House who indicated they knew this was a crisis and that something major needed to be done, but they voted against the bill because of some Bush-bashing comments made by Democratic leader Nancy Pelosi. So, in other words, they let disdain over supposedly partisan political comments override their responsibility to do what is best for the country.

One other aspect of the current situation must be considered. The bailout bill was by no means the final word on this financial mess. It was designed as the starting point.

Lack of regulation and fiscal discipline provided the underlying cause for this crisis. Whatever the final version of the bailout bill (and there WILL be one), it will be just the first step in restoring sanity to our system in terms of how mortgage and investment banking operates in our society.

There may very well be other steps that can be taken to make this legislation better, but the reality is that something must be done quickly to end the pain and the potential panic.

--REK