US senators to vote on bail-out

George Bush says the cost of not acting will be higher than the $700 billion rescue deal

US senators will vote on Wednesday on a revamped financial rescue package after the House of Representatives rejected an initial $700bn (£380bn) plan.

The new package is expected to be similar to the initial plan, but will include some new measures to ease its passage through Congress.

One of those new clauses will raise the government’s guarantee on savings from $100,000 to $250,000.

The vote comes after senior Democrats pledged to find a bipartisan solution.

Senator Harry Reid and House of Representatives Speaker Nancy Pelosi wrote to President George W Bush saying they expected a bipartisan rescue plan to soon be approved.

“Working together, we are confident we will pass a responsible bill in the very near future,” they said.

Earlier President Bush had warned that the US economy was at a “critical moment”.

Possible momentum

The Dow Jones index closed up 4.7% on Tuesday, recouping some losses from Monday’s rout, after the markets reacted favourably to the president’s statement.

Markets in Japan and Australia saw gains as they opened on Wednesday morning, with the Nikkei climbing 1.2%.

We’re facing a choice between action and the real prospect of economic hardship for millions of Americans

President Bush

Analysts say the Senate is more likely to pass the bill because senators are not facing the same pressure from voters as members of the House.

All representatives face re-election in November compared with only one-third of senators.

The BBC’s Jonathan Beale, in Washington, says a positive vote in the Senate is likely to give the bill momentum when it goes back to the House.

Presidential candidates John McCain and Barack Obama, who both support Mr Bush’s efforts to bail out the economy, say they will return from campaigning to vote in the Senate.

‘Not the end’

Mr Bush said at the White House: “We are in an urgent situation and the consequences will grow worse each day if we do not act.”

The economy was depending on “decisive action on the part of our government”, he added.

He said he wanted to “assure our citizens and citizens around the world that this is not the end of the legislative process”.

“Our country is not facing a choice between government action and the smooth functioning of the free market,” he said.

“We’re facing a choice between action and the real prospect of economic hardship for millions of Americans,” he warned.

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