Why did the Pharisees Reject God's Grace?

For John came unto you in the way of righteousness, and ye believed him not; but the publicans and the harlots believed him: and ye, when ye had seen it, repented not afterward, that ye might believe him. (Matthew 21:32)

Why did the Pharisees rejected the grace of God , could it be that the concept of grace underminded their religious system and they would have to relinquish their manipulation and control? Not only does religion not understand God's love for us, it also holds people’s failures against them as a reason for not loving or accepting them, while God's Word tells us that love keeps no record of wrong: "And above all things have fervent love among yourselves: for love shall cover a multitude of sins." (1 Peter 4:8)

When a person continues to go over things in their mind hoe people wronged them they will become bitter and hold resentment in their heart while overlooking the love that God has  for them, and they will fail to show that same love towards people who has wronged them.

Religion is a performance system; it expects people to live up to a religious performance standard of do’s and don’ts. Religion maintains that doing the do’s and not doing the don’ts is the path to pleasing God...this causes people to feel guilty and condemned over the smallest failure in trying to measure up to the religious standard and be judged as doing wrong by those who claim to be religious law keepers.

Religion expects God’s favor because it has earned it by doing good deeds and living up to the law, while a person who as a grace relationship with God receive His blessings because it is based solely on what God has done.