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Wall Street bail-out goes to vote Wall Street bail-out goes to vote
(10 minutes later)
The lower house of the US Congress has gathered to vote on a $700bn (£380bn) plan that aims to bail out Wall Street.The lower house of the US Congress has gathered to vote on a $700bn (£380bn) plan that aims to bail out Wall Street.
President Bush has urged the House of Representatives to pass the bill - designed to end the credit crunch - and send a strong signal to the markets.President Bush has urged the House of Representatives to pass the bill - designed to end the credit crunch - and send a strong signal to the markets.
He said the deal was a "bold" one which he was confident would restore strength and confidence to the US economy. It comes on the day that Wachovia - the fourth largest US bank - bought by rival Citigroup after becoming the latest to experience problems.
In Europe, Benelux giant Fortis was bailed out by three governments.
And in the UK, the Bradford & Bingley bank was nationalised.
Speaking at the White House, Mr Bush said the deal was a "bold" one which he was confident would restore strength and confidence to the US economy.
However, he warned that the bail-out would not answer all economic woes and that some difficulties would remain.However, he warned that the bail-out would not answer all economic woes and that some difficulties would remain.
Speaking at the White House, President Bush said: "I'm confident that this rescue plan, along with other measures taken by the Treasury Department and the Federal Reserve, will begin to restore strength and stability to America's financial system and overall economy."
But the agreement has done little to calm global stock markets, which have fallen sharply.
READ THE BAIL-OUT BILL Emergency Economic Stabilization Act[189KB] Most computers will open this document automatically, but you may need Adobe Reader Download the reader hereREAD THE BAIL-OUT BILL Emergency Economic Stabilization Act[189KB] Most computers will open this document automatically, but you may need Adobe Reader Download the reader here
Financial services firms were still in trouble, with Wachovia - the fourth largest US bank - bought by rival Citigroup after becoming the latest to experience problems. President Bush said: "I'm confident that this rescue plan, along with other measures taken by the Treasury Department and the Federal Reserve, will begin to restore strength and stability to America's financial system and overall economy."
In Europe, Benelux giant Fortis was bailed out by three governments and the UK's Bradford & Bingley bank was nationalised. But the agreement has done little to calm global stock markets, which fell again on Monday.
Leaders of the US Senate are planning to put the the bail-out to a vote on Wednesday. Leaders of the US Senate are planning to put the bail-out to a vote on Wednesday.
If approved by the Senate and House, the revised plan will lead to the biggest intervention in the markets since the Great Depression in the 1930s.If approved by the Senate and House, the revised plan will lead to the biggest intervention in the markets since the Great Depression in the 1930s.
Political timetablePolitical timetable
Time is of the essence, not only to end the log-jam in financial markets, but also because of the election timetable in the United States.Time is of the essence, not only to end the log-jam in financial markets, but also because of the election timetable in the United States.
The US Congress was supposed to go into recess last Friday, and with presidential and congressional elections in early November, politicians are keen to hit the campaign trail with a resolution to the crisis under their belt. The US Congress was supposed to go into recess last Friday, and with presidential and congressional elections in early November, politicians are keen to hit the campaign trail with a resolution to the crisis under their belt. class="lp" href="http://news.bbc.co.uk/1/hi/talking_point/default.stm">HAVE YOUR SAY The American 700b bail-out will keep credit flowing and therefore keep business going, but it will not get rid of all the bad loans that are on the books and bundled off around the world. Diana, Claremont, US class="" href="http://newsforums.bbc.co.uk/nol/thread.jspa?forumID=5388">Send us your comments
The two candidates for the presidency, Democrat Barack Obama and Republican John McCain, have given their cautious support for the proposed legislation.The two candidates for the presidency, Democrat Barack Obama and Republican John McCain, have given their cautious support for the proposed legislation.
The original bail-out package proposed by the US administration was deeply unpopular with many Americans.The original bail-out package proposed by the US administration was deeply unpopular with many Americans.
During a weekend of negotiations, numerous clauses were added to the proposed Emergency Economic Stabilization Act of 2008, designed to reassure taxpayers.During a weekend of negotiations, numerous clauses were added to the proposed Emergency Economic Stabilization Act of 2008, designed to reassure taxpayers.
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.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.
Democratic Senate leader Harry Reid said the deal was a big improvement on the initial proposal.Democratic Senate leader Harry Reid said the deal was a big improvement on the initial proposal.
"They wanted a blank cheque and we couldn't give them one... Now we have to get the votes.""They wanted a blank cheque and we couldn't give them one... Now we have to get the votes."
No 'golden parachutes'No 'golden parachutes'
The deal addresses several of the key concerns raised by both Democrats and Republicans:
  • The government will release 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:
  • The government will release 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 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 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, while originating there, have not been limited to the US.The liquidity problems, while originating there, have not been limited to the US.