The defeat in the U.S. House of the $700 billion Emergency Economic Stabilization Act is a "huge mistake" for the country's financial system, some region business professors said Monday.

Related story: Bailout bill slapped aside; record stock plunge

Related story: Visclosky: Bailout would have helped foreign banks, cost locals

Related story: Region residents see no upside to bailout

Graphic: Comparing the current financial crisis with previous ones

Graphic: Timeline of the current financial crisis

Graphic: What led to Wall Street's meltdown

"This is not the greatest bailout package if you had all the time in the world to work one out, but it was probably an improvement over doing nothing," said Donald Coffin, associate professor of economics at Indiana University Northwest. "I'm at a loss to know what Congress is planning to do now."

Bruce MacLean, director of Valparaiso University's graduate business program, said the defeated plan would have been a "win-win situation" for taxpayers because it would have prevented even worse turmoil in the financial industry. He also said the securities the government would have purchased under the bailout plan could have been worth $1 trillion.

"Someone is looking for vengeance," he said after the U.S. House voted 228 to 205 against the bailout Monday afternoon. "They don't want to fix the problem. They want to blame someone. It was political grandstanding, and I'm hoping they'll come around quickly and not ruin our entire financial system for political gain."

MacLean said he had studied the details of the plan and went to bed late Sunday night content it would pass and that the crisis would dissipate.

"Only a portion of the assets were spoiled," MacLean said. "A lot of mortgages were bundled together, the subprimes with the good one. (U.S. Secretary of Treasury Henry) Paulson was trying to remove the bad ones by unbundling them and working with the people holding the subprime ones to get the rates down so they were again affordable."

Bala Arshanapalli, professor of finance at Indiana University Northwest, said the package carried uncertainty because no one knows if it would bring in financial stability. But he said it would have been better to pass the package and infuse the financial capital needed to bail out the financial markets.

"There is so much of a credit crunch that without the cash, a lot of financial institutions will be in trouble," he said.

Coffin said the current financial crisis won't go away unless something is done in Washington.

"Someone is going to have to find out what the people who voted no are willing to vote yes for," he said. "It's not just a Wall Street issue. The commercial paper market isn't functioning well, and interest rates are getting higher. Small business credit is getting tighter and drying up working capital. There's a real problem that won't disappear because Congress voted no. It's clear that Congress won't adjourn. They can't afford to."

MacLean said he's not sure what will happen now.

"I'm hoping it's grandstanding by those legislators," he said. "The current bill is the right answer for fixing the problem if they're allowed to make modifications."

Arshanapalli said something needs to be done and done soon.

"It should happen to infuse some confidence in the markets," he said.

No one on Wall Street is being bailed out, MacLean said. Those who caused the problems have been fired or soon will be. The policies of FreddieMac and FannieMae are to blame for the crisis, he said.