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Henry Paulson woke up this morning set to become the most powerful man in Washington. Sounds like an exaggeration, I know, but it’s really not too far from the truth. The bill that Congress rejected today would’ve given him unprecedented new powers over the markets. But lawmakers clearly had other ideas.

From Washington, Marketplace’s Steve Henn has more on the day’s events.

When Bernake and Paulson asked for $700 billion, everyone knew it would be a tough sell. But the stakes were enormous. Steve Bartlett is president of the Financial Services Round Table.

Steve Bartlett: No one likes it but it is about the economy and it’s about the economy of 340 million Americans.

Paulson tried to craft a plan that would satisfy moderates in both parties. It didn’t work. At about 1:45 eastern time, Wall Street and Washington stood still. The massive bailout of the financial services industry was clearly in trouble. Ninety-four liberal Democrats like Congresswomen Lynn Woosley were against it.

Lynn Woosley: Why isn’t wall street paying for the mess they created?

They were joined by more than 100 conservative Republicans like Texas Congressman Jeb Henserling.

Jeb Henserling: I fear that ultimately it may not work.

The rank and file were revolting. Paulson, Bernanke, the president and the leaders of both parties in Congress had lost control. By 2:15 they had lost the vote. Steve Bartlett at the Financial Services Roundtable, was deeply disappointed.

Bartlett I do think there is a lot of anger. But I think the level of sort of quiet, hidden majority support for solving the problem is even greater.

But today, the industry and its allies in Washington were fighting off a revolt on two fronts. Liberals and conservatives in Congress both hate this rescue plan for different reasons, and they want different things in end. Liberals like Woosley believe the federal government completely failed to regulate the banking industry and protect consumers. Conservatives see the roots of the crisis in Fannie Mae and Freddie Mac. They believe those two firms were too close to the government, grew too big and took too many risks. For Henserling, the idea of an even bigger government role in the banking industry is a non-starter.

Henserling: That does put us on the slippery slope to socialism.

And today, free-market conservatives like him found the unlikeliest of allies in big government liberals like Woosley. For a few minutes they found one thing in common. This bailout package was bad news.

In Washington, I’m Steve Henn from Marketplace.