US politicians have published a $700bn deal to rescue America's financial system and end the credit crunch.
US politicians have announced a $700bn deal to rescue America's financial system and end the credit crunch.
The move, backed by both Republican and Democratic leaders, allows the Treasury to spend up to $700bn (£380bn) buying bad debts from ailing banks in the US.
The move, backed by both Republican and Democratic leaders, allows the Treasury to spend up to $700bn (£380bn) buying bad debts from ailing banks in the US.
President George W Bush announced his support of the bill. Both houses of Congress are expected to vote on it in the coming days.
President George W Bush announced his support of the bill. Both houses of Congress are expected to vote on it in the coming days.
Stock markets in Asia rose following the announcement.
Stock markets in Asia rose following the announcement.
If approved, the plan will led to the biggest intervention in the markets since the Great Depression in the 1930s.
The announcement came after days of high-level wrangling between Republicans and Democrats in Congress over the content of the bill.
Nancy Pelosi, the Democratic Speaker of the House of Representatives, said the message to Wall Street was that "the party is over".
Both parties had vigorous objections to a proposal submitted last week by Treasury Secretary Henry Paulson that would have given him sweeping powers over how the money was spent.
She said the "bipartisan deal" was "not a bailout of Wall Street", but designed to ensure pensions, savings and jobs would be safe.
His plan was prompted by a string of failures in large US financial institutions, including the government bail-out of insurance giant AIG.
Democratic Senate leader Harry Reid said Americans had "every reason to be concerned and even angry" in the light of the "greed on Wall Street" and "unenforced regulations".
If approved by the Senate and House, the revised plan will led to the biggest intervention in the markets since the Great Depression in the 1930s.
But he added: "Every American has an interest in fixing this crisis - inaction would paralyse the economy."
Nancy Pelosi, the Democratic Speaker of the House of Representatives, said the agreement was "not a bailout of Wall Street", but designed to ensure pensions, savings and jobs would be safe.
During the past two weeks, the global credit crunch has seen several financial institutions running into liquidity problems, where they cannot free up the money to keep their daily business going.
Democratic Senate leader Harry Reid said the deal was a big improvement on the initial proposal.
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In
the United States' largest bank failure, Washington Mutual was taken over by regulators and sold on to JPMorgan Chase
Several
investment banks got into varying degrees of trouble, with Lehman Brothers collapsing, Merrill Lynch seeking refuge in a takeover by Bank of America and Morgan Stanley securing a large capital injection from a Japanese rival
US
insurance giant AIG had to be bailed out by the US government, which effectively took an 80% stake in the firm
In
the UK, meanwhile, mortgage lender Bradford & Bingley is set to be nationalised on Monday morning, with the savings part of the business to be sold to Spanish banking group Santander
In
Germany Hypo Real Estate, a bank specialising in financing property deals, is widely reported to face a serious cash crisis
The
governments of Belgium, Luxembourg and the Netherlands agreed late on Sunday evening to invest 11.2bn euro in huge financial services group Fortis, effectively nationalising it
"They wanted a blank cheque and we couldn't give them one... Now we have to get the votes."
No golden parachutes
'Necessary tools'
The negotiations had lasted all weekend and were so intense that at one point US Treasury Secretary Hank Paulson suffered what was described as a "woozy spell".
The negotiations had lasted all weekend and were so intense that at one point Treasury Secretary Hank Paulson suffered what was described as a "woozy spell".
Now that agreement has been reached on the so-called Act of Emergency Economic Stabilization 2008, both the House of Representatives and the Senate are expected to vote on it as early as Monday.
Now that agreement has been reached on the so-called Act of Emergency Economic Stabilization 2008, both the House of Representatives and the Senate are expected to vote on it as early as Monday.
The US administration wanted a deal to be announced before markets open in Asia on Monday morning.
The US administration had wanted a deal to be announced before markets open in Asia.
After senior members of Congress announced the agreement, President Bush gave his backing to the draft legislation.
After senior members of Congress announced the agreement, President Bush gave his backing to the draft legislation.
He said the bill would send a strong message that the US was serious about restoring confidence in its financial markets.
He said the bill would send a strong message that the US was serious about restoring confidence in its financial markets.
"This bill provides the necessary tools and funding to help protect our economy against a system-wide breakdown," he said in a statement.
"This bill provides the necessary tools and funding to help protect our economy against a system-wide breakdown," he said in a statement.
Stock markets in East Asia reacted positively as they opened just hours after the announcement, with Tokyo's Nikkei index and Seoul's Kospi registering gains.
The first stock markets to open after the news broke reacted positively, with Tokyo's Nikkei index and Seoul's Kospi registering gains.
The deal addresses several of the key concerns raised by both Democrat and Republican critics of the original plan proposed by the US administration.
No golden parachutes
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The government will get the money in tranches - $250bn straight away, and $100bn at the request of the White House; Congress can veto the release of the remaining $350bn
Banks that accept bail-out money will have to hand over shares in return, which allows tax payers to benefit from the banks' recovery
Top bankers, meanwhile, will see their pay limited, and "golden parachutes" - huge payments when they leave the firm - will be banned
The banking industry will have to help finance the bail-out if the money can not be recovered from the struggling banks themselves
Four agencies will monitor the deal, including an independent Inspector General and a bipartisan oversight board
Banks will be obliged to join an insurance programme to protect them against the losses of mortgage-backed securities
The deal addresses several of the key concerns raised by both Democrats and Republicans:
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The government will get the money in tranches - $250bn straight away, and $100bn at the request of the White House; Congress can veto the release of the remaining $350bn
Banks that accept bail-out money will have to hand over shares in return, which allows tax payers to benefit from the banks' recovery
Top bankers, meanwhile, will see their pay limited, and "golden parachutes" - huge payments when they leave the firm - will be banned
The banking industry will have to help finance the bail-out if the money can not be recovered from the struggling banks themselves
Four agencies will monitor the deal, including an independent Inspector General and a bipartisan oversight board
Banks will be obliged to join an insurance programme to protect them against the losses of mortgage-backed securities
The proposed legislation was now "frozen", said Ms Pelosi, which means critics can not strike out individual provisions that they do not like.
The proposed legislation was now "frozen", said Ms Pelosi, which means critics can not strike out individual provisions that they do not like.
Already, several key critics of the deal called on their fellow legislators to block it.
However, several key critics of the deal called on their fellow legislators to block it.
Financial woes
The Bush administration submitted its initial proposal after several financial institutions got into trouble - unable to free up the money to keep their daily business going.
The liquidity problems have not been limited to the US.
In the United States' largest bank failure, Washington Mutual was taken over by regulators and sold on to JPMorgan Chase
Lehman Brothers collapsed, Merrill Lynch sought refuge in a takeover by Bank of America and Morgan Stanley secured a large capital injection from a Japanese rival
US insurance giant AIG had to be bailed out by the US government, which in effect took an 80% stake in the firm
In the UK, meanwhile, mortgage lender Bradford & Bingley is set to be nationalised, with the savings part of the business to be sold to Spanish banking group Santander
The governments of Belgium, Luxembourg and the Netherlands agreed late on Sunday evening to invest 11.2bn euro in huge financial services group Fortis, in effect nationalising it.
