Bush urges Congress to reconsider bailout plan

October 1st, 2008 - 7:40 am ICT by IANS  

Washington, Oct 1 (DPA) The White House Tuesday pushed again for passage of its $700-billion financial rescue plan, a day after the bailout collapsed in the US House of Representatives.With a worried eye on the jittery stock market, President George W Bush again warned of “urgent” consequences unless Congress acts.

The White House said that Bush would continue to discuss the deal with congressional leaders and administration officials in hopes of winning passage by the end of the week.

“The president intends to stay here to work on this financial rescue package with members of Congress for as long as it takes to get this done, because it is - it is critical,” White House spokesman Tony Fratto said.

He gave no details about what changes the White House might consider to secure passage of the legislation.

Monday, the House of Representatives rebuffed a $700-billion life raft for Wall Street in a 228-205 vote. Bush’s own centre-right Republicans voted against the plan by a 2-to-1 margin. The House is closed Tuesday for Jewish New Year celebrations but could reopen Wednesday.

Senate Majority Leader Harry Reid, a Democrat, said his upper chamber would continue to move forward with the bill.

“We are all committed to keeping the progress of the rescue package moving forward,” Reid said. “In the coming days, I will continue doing everything possible to see this dire and avoidable financial crisis through to the best possible outcome and towards a future of stability and growth for our country’s economy.”

Senator Mitch McConnell, leader of the minority Republicans, said there would be an agreement by the end of the week.

“We’re not going to sit around and point fingers. We’re going to get the job done, and we’re going to get it done this week,” McConnell said, noting that a lack of credit had already begun to hurt businesses.

Presidential candidates John McCain and Barack Obama joined the chorus for a reconsideration of the proposal, emphasizing the urgency.

The bill had proven wildly unpopular with the public, and so many people had contacted their representatives about the proposal that steps had to be taken to restrict email to Congress to prevent servers from crashing, according to The Hill, a newspaper that covers Congress.

A Washington Post-ABC News poll showed that most Americans believe there is a financial crisis, with about 90 percent concerned that Monday’s failure of the bill could prompt further decline. Still, just 45 percent of 520 people surveyed supported the unpopular bill.

Monday, Wall Street appeared deeply disappointed about the failure, with share prices shattering records with their sudden dive. Stocks rebounded Tuesday on renewed hopes for a deal and as investors saw opportunities to snap up shares at bargain prices.

The broad-based Standard & Poor’s 500 index rose 5.3 percent, recovering more than half its 8.8 percent decline a day earlier. The blue-chip Dow Jones Industrial Average 4.7 percent, after falling 7 percent Monday.

Bush noted that US shareholders lost $1 trillion in Monday’s decline and warned of the impact on tens of millions of people’s retirement accounts and personal savings.

He said that if the country “continues on this course”, the harm will be permanent.

Bush said that the plan did not represent a choice between government intervention and the free market.

“Our country is now facing a choice between action and the real prospect of economic hardship for millions of Americans,” Bush said. “For the financial security of every American, Congress must act.”

The agency that guarantees US bank deposits, the Federal Deposit Insurance Corporation, requested it be allowed to insure up to $250,000 for individual depositors, up from the current $100,000 limit. The temporary move was designed to boost liquidity and reassure nervous bank customers.

As the uncertainty on US markets spilled over internationally, French President Nicolas Sarkozy called for an emergency summit of world leaders to address the crisis, while the European Commission is on the eve of unveiling its own plans to improve the regulation of the financial sector.

The proposals, due to be presented Wednesday, envision forcing banks to set aside capital to cover their riskiest activities and improving supervision over banks operating in different European countries.

The European Commission Tuesday urged United States lawmakers to uphold their responsibilities and swiftly approve a massive rescue plan amid global financial turmoil.

“The turmoil that we are facing has originated in the US, and has become a global problem,” said commission spokesman Johannes Laitenberger.

The US has been consulting daily with other governments, according to David McCormick, Treasury Department under secretary for international affairs, stressed that “What we’ve seen in the past several weeks makes it clear this isn’t a set of challenges that’s unique to any one country,” he told international media in Washington.

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