WASHINGTON (MarketWatch) - With a firm rejection of Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke, the House Republicans have told the financial markets that they'll have to solve their problems on their own, without $700 billion of taxpayer money.

In a stunning vote on Monday, the House rejected the financial rescue package on a vote of 205 to 228. Republicans voted against the bill by a two-to-one ratio, and in the process rejected their own leadership, who had worked for nearly a week to craft a bill that could gain a majority. Nearly 100 Democrats also voted against the bill, spurning their leadership.

Many Republicans in the House were never persuaded that the credit crunch in the financial system is an impending disaster deserving of taxpayer aid. Politicians who had cut their teeth on free-market principles couldn't accept the idea that the federal government should back up the banks who had foolishly bet everything on the housing bubble.

Or they didn't want to face the voters in six weeks and explain why a Republican would vote for the biggest government bailout ever.

Now we shall see if Paulson and Bernanke were right when they said the credit crisis could worsen and inflict dire consequences on the global economy. Or perhaps the plan's many critics were right in saying that credit markets and home prices can adjust on their own, once the promise of free money is withdrawn.

The leaders in Congress and in the administration will undoubtedly try again, hoping to write a compromise bill that can attract a majority. But that won't be easy, because the Paulson plan had significant opposition from backbenchers on both the Republican right and the Democratic left.

Rejection of the plan means there's no political solution to this financial crisis on the horizon. As it now stands, the markets are on their own.

The next six weeks will tell whether the coup d'etat in the House on Monday has created a political crisis to match the financial one.

--Rex Nutting, Washington bureau chief