US senate backs bailout plan

Politicians approve revised bill aimed at rescuing US banking system.

    Global markets have been thrown into turmoil by the US financial crisis [AFP]

    The vote however failed to give a much-needed boost to investor confidence, with major Asia-Pacific markets all trading down by midday on Thursday amid continuing gloom over the global economic outlook.

    Japan's benchmark Nikkei index was down 1.88 per cent at the close of trade, falling to its lowest level in three years.

    In South Korea the Kospi index was down 1.33 per cent by midday, while in Sydney the S&P/ASX 200 dipped 0.5 per cent after the US vote.

    House vote


    Fighting against US foreclosures

    Speaking after Wednesday's senate vote, Harry Reid, the senate Democratic leader, said he expected the House of Representatives to approve the bill.

    George Bush, the US president, said the state of the US economy demanded the bailout package be approved.

    "The American people expect - and our economy demands - that the House pass this good bill this week and send it to my desk," Bush said in a statement.

    Opponents of the bill have expressed concerns over handing that much power to one man, and reject the idea of using taxpayer money to bail out disgraced Wall Street firms.

    Maya Rockeymoore, an analyst from Global Policy Solutions, told Al Jazeera that the bill was "tilted towards Wall Street" and that it did not do enough to aid the millions facing home foreclosures as a result of the subprime mortgage crisis.

    "There are many people that believe this is not the bill that the United States needs," she said.

    But Toby Chaudhuri, a Democrat strategist, said that the bailout plan was the only solution to stave off a wider banking crisis.

    "The reason we are in this mess is due to years of deregulation that House conservatives have pushed for years and years and years," he told Al Jazeera.

    " The reason why we are having to do this bailout is not to simply help a few folks on Wall Street. It is really because the credit markets are going to dry up if we do not put assets back into the system."

    Financial turmoil


    US economic woes

    Weeks of financial turmoil were sparked after several major US financial institutions collapsed or were forced to the brink of bankruptcy following losses sustained in the subprime mortgage crisis.

    Other global financial institutions have been caught up in the crisis, which has caused chaos on global markets.

    The senate vote was called late on Tuesday, after Democratic and Republican negotiators agreed on the terms of the amended bailout, which includes extended tax cuts for businesses.

    In another new measure, the bill, which required 60 votes in the 100-member senate to pass, raises the limit on federal insurance for bank deposits from $100,000 to $250,000.

    Presidential politics

    Barack Obama, the US Democratic presidential candidate and Illinois senator, had told the senate that while the revised plan was not perfect, it needed to be passed. 

    "It's clear that, from my perspective, that this is what we need to do right now to prevent the possibility of a crisis turning into a catastrophe."

    John McCain, the Republican candidate, also left the campaign trail to return to Washington for the vote.

    The amended bill retains most facets of the original plan which gives Henry Paulson, the US treasury secretary, the power to buy failing mortgage-related assets from troubled banks and includes restrictions on pay-offs to financial executives.

    SOURCE: Al Jazeera and agencies


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