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Bush says bail-out will be passed Bush says bail-out will be passed
(10 minutes later)
President George W Bush has said that legislators will "rise to the occasion" and pass the Wall Street rescue plan.President George W Bush has said that legislators will "rise to the occasion" and pass the Wall Street rescue plan.
In a statement he said that are still disagreements because, "the proposal is big and the reason it's big is because it's a big problem". In a statement he said there were still disagreements because, "the proposal is big and the reason it's big is because it's a big problem".
President Bush is expected to resume talks with Congressional leaders later on Friday to try to reach an agreement.President Bush is expected to resume talks with Congressional leaders later on Friday to try to reach an agreement.
He wants to pass a $700bn (£380bn) rescue package to buy mortgage-backed assets from US banks.He wants to pass a $700bn (£380bn) rescue package to buy mortgage-backed assets from US banks.
'Shouting match''Shouting match'
He added that, "there is no disagreement that something substantial must be done". "There is no disagreement that something substantial must be done," he added.
Talks to agree the huge bail-out of the financial industry ended in a "shouting match" on Thursday.Talks to agree the huge bail-out of the financial industry ended in a "shouting match" on Thursday.
After several hours of discussions with President Bush, a group of Republican members of Congress blocked the government plan.After several hours of discussions with President Bush, a group of Republican members of Congress blocked the government plan.
The proposal would have seen the government buy bad debts from US banks to prevent more of them collapsing.The proposal would have seen the government buy bad debts from US banks to prevent more of them collapsing.
The leader of the Democrats in the House of Representatives, Nancy Pelosi, told ABC News that she "hoped" a bailout plan could be agreed within 24 hours, because "it has to happen".The leader of the Democrats in the House of Representatives, Nancy Pelosi, told ABC News that she "hoped" a bailout plan could be agreed within 24 hours, because "it has to happen".
Financial markets are gummed up because banks do not know exactly how much bad debt they hold and are therefore reluctant to lend to businesses, consumers and each other.Financial markets are gummed up because banks do not know exactly how much bad debt they hold and are therefore reluctant to lend to businesses, consumers and each other.
The fall-out of this credit crunch continues to have a huge impact:
  • The United States suffered its largest bank failure yet, when regulators moved in to close down Washington Mutual and then sold it to US rival JP Morgan Chase for $1.9bn
  • In a co-ordinated move the European Central Bank, the US Federal Reserve, the Bank of England, Bank of Japan and the Swiss National Bank announced new short-term loans to the banking sector worth tens of billions of dollars
  • Banks continued to cut costs, with UK banking giant HSBC saying it would axe 1,100 jobs
  • Shares in UK bank Bradford & Bingley fell another 20% to 17 pence before recovering slightly.
The fall-out of this credit crunch continues to have a huge impact:
  • The United States suffered its largest bank failure yet, when regulators moved in to close down Washington Mutual and then sold it to US rival JP Morgan Chase for $1.9bn
  • In a co-ordinated move the European Central Bank, the US Federal Reserve, the Bank of England, Bank of Japan and the Swiss National Bank announced new short-term loans to the banking sector worth tens of billions of dollars
  • Banks continued to cut costs, with UK banking giant HSBC saying it would axe 1,100 jobs
  • Shares in UK bank Bradford & Bingley fell another 20% to 17 pence before recovering slightly.
'Full throated discussion' 'Full-throated discussion'
On Thursday, Democrat and Republican legislators appeared to have struck a deal.On Thursday, Democrat and Republican legislators appeared to have struck a deal.
A group of Democrats and Republicans even made a public statement, with Senator Christopher Dodd, chairman of the Senate Banking Committee, announcing that they had reached "fundamental agreement" on the principles of a bail-out plan.A group of Democrats and Republicans even made a public statement, with Senator Christopher Dodd, chairman of the Senate Banking Committee, announcing that they had reached "fundamental agreement" on the principles of a bail-out plan.
But after the White House meeting, the top Republican on the committee, Richard Shelby, told reporters: "I don't believe we have an agreement."But after the White House meeting, the top Republican on the committee, Richard Shelby, told reporters: "I don't believe we have an agreement."
The intense discussions reportedly saw US Treasury Secretary Henry Paulson literally down on one knee, begging Ms Pelosi to help push through the bail-out package.The intense discussions reportedly saw US Treasury Secretary Henry Paulson literally down on one knee, begging Ms Pelosi to help push through the bail-out package.
However, the agreement unravelled when a group of Republican legislators objected to the principle of the plan.
The talks at the White House, led by Mr Paulson and US President George W Bush, then descended into what one participant described as "a full-throated discussion".
Officials with the campaign team of Republican presidential candidate John McCain spoke of "a contentious shouting match".
The Republican critics of the bail-out plan worry about both its cost and how it would involve the government in the financial sector. Instead, they want a government-backed insurance policy for the huge amounts of bad debt built up by US banks.
This proposal, however, was described as "unworkable" both by Democrat politicians and some US government officials.