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Hopes grow as US senators vote on new bail-out plan with tax breaks
Martin Bentham, Home Affairs Editor1 Oct 2008
US senators will today vote on a revised bank bail-out scheme in the first stage of a new drive by the country's leaders to tackle the financial crisis which has rocked the American and world economies.
The new package will contain tax breaks for businesses and middle-class voters as well as an increase in the amount of savers' deposits that will be guaranteed by the US government.
It has already been backed by the Senate's Democrat and Republican leaders, while presidential candidates Barack Obama and John McCain were both flying to Washington to vote in favour.
Today's vote follows a renewed appeal by President Bush yesterday for Congress to back the $700 billion bailout in the wake of the decision by the House of Representatives to reject it amid tumultuous scenes on Monday.
By holding the first vote on the revised package in the Senate - the upper house of Congress - US leaders hope to generate a positive momentum that will boost its chances of winning approval when it eventually returns to the House of Representatives, probably later this week.
The proposed tax breaks, which are likely to prove popular with Republican opponents of the original salvage scheme, are expected to improve the revised plan's chances of gaining support. The legislation will raise the government's guarantee on savings from the current $100,000 limit to $250,000.
One possible other amendment to the revised bail-out plan could see the US Treasury buying shares in financial institutions themselves, rather than purchasing their failing mortgage assets. The potential advantage of this would be that it could allow American taxpayers to share in any profits generated by a financial revival.
Mr Bush and senior political leaders from both parties hope the changes will be sufficient to secure the approval of Congress and stabilise financial markets. Observers believe it is more likely to win approval in the Senate - where it must gain the backing of 60 out of the 100 senators - because its members are not facing the same pressure from voters as their colleagues in the House of Representatives.
This is because only a third of Senators are up for re-election in November, unlike members of the House of Representatives, whose seats are all being contested in the polls.
Its members stunned the US and world financial markets by rejecting the original $700 billion package with some Republicans arguing that it amounted to unwarranted "socialist" state intervention in the free market. The Dow Jones index suffered its biggest ever one day fall.
Reader views (1)
Be Strong! No Bail Out!
- Sam Robertson, Portland, Oregon, USA, 01/10/2008 16:34
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