Senate urged to back crisis bill

Bush urges senators over bill

President Bush and Senate leaders have appealed for a new version of a $700bn (£380bn) economic rescue plan to be approved in a vote on Wednesday night.

Senate Democrat leader Harry Reid said “inaction is not an option” and stressed the bill was “not a bail-out for Wall Street, but for the country”.

Mr Bush urged senators to take the bill “very seriously” and to pass it.

The plan also needs support in the House of Representatives, which rejected a similar bill on Monday.

Speaking a few hours before the vote, Mr Bush said the bill needed to pass in order to calm volatile markets.

CHANGES TO BILL
Raises government’s guarantee on savings from $100,000 to $250,000
Tax breaks to help small businesses and promote renewable energy
Expansion of child tax credit and help for victims of recent hurricanes

“It’s very important for us to pass this piece of legislation so as to stabilise the situation – so that it doesn’t get worse and then our fellow citizens lose wealth and work,” he said.

The House of Representatives would vote on a revised version on Friday, the president said.

US presidential hopefuls John McCain and Barack Obama are returning from their campaign trail for the vote, which is due to begin about 1930 (2330 GMT).

Senate Republican leader Mitch McConnell said he was optimistic for a “bipartisan victory”.

Revised proposal

Global markets were volatile on Wednesday ahead of the vote.

On Wall Street the Dow Jones index closed down 0.18% at 10,831.1.

There will be a time to punish those who set this fire, but now is the moment for us to come together and put the fire out

Barack Obama

But hopes that enough changes had been made to get the bill through saw shares close up strongly in Asia on Wednesday.

In Europe, the UK’s FTSE 100 finished 1.1% higher at 4,959.6 points, France’s key index added 0.6% while German shares fell.

Changes to the rescue plan involve lifting the US government’s guarantee on savings from $100,000 to $250,000 and a package of targeted tax breaks.

They are designed to answer critics who felt the original plan was weighted too much in favour of Wall Street while not enough was being done to help struggling American families.

To get through the Senate, the bill will require backing by 60 of the 100 senators. It would then return to the House of Representatives on Friday.

Some members of Congress continue to press for more fundamental changes to the bill, says the BBC’s Americas editor Justin Webb.

The House’s rejection of the earlier version of the plan on Monday led to sharp falls on world stock markets.

In other developments:

  • The European Union outlines its own proposals for reforming banking regulation which, if approved, could see dramatic changes to the way in which banks operate
  • France proposes an emergency European fund to rescue crisis-hit banks and pushes for a summit with Germany, Britain and Italy
  • Russian Prime Minister Vladimir Putin says the “irresponsibility” of the US financial system is to blame for the crisis
  • Ireland’s government discusses a move to guarantee all bank deposits with the EU Competition Commissioner

‘Painful recession’

In election campaigning on the eve of the vote, Mr McCain and Mr Obama urged politicians of both parties to work together to pass the emergency legislation.

Speaking in Reno, Nevada, Mr Obama warned that without action by Congress “millions of jobs could be lost, a long and painful recession could follow”.

John McCain campaigns in Iowa, 30 Sept

John McCain said inaction by Congress was putting the US at risk

He added: “There will be a time to punish those who set this fire, but now is the moment for us to come together and put the fire out.”

Mr McCain, who campaigned in Des Moines, Iowa, said inaction by Congress had “put every American and the entire economy at the gravest risk” and that Washington urgently needed to show leadership.

“I am disappointed at the lack of resolve and bipartisan goodwill among members of both parties to fix this problem,” he said.

The vote comes a day before a TV debate between vice-presidential candidates Joe Biden and Sarah Palin.

Mr Biden, Mr Obama’s running mate, is also expected to take part in the Senate vote.

Meanwhile, ex-President Bill Clinton – whose wife Hillary lost to Mr Obama in a fierce primary contest for the Democratic nomination – held his first rally for Mr Obama.

He told Florida voters that Mr Obama had “better answers”.

“Better answers for the economy, for energy, for health care, for education. He knows what it will take to get this country back on track,” Mr Clinton said.

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