 US House throws out bailout plan
(China Daily)
Updated: 2008-10-01 07:23 WASHINGTON: The $700 billion US bailout bill failed to clear the House on Monday, triggering a mad scramble for a fresh plan to rescue a beleaguered financial market and prevent a global stock meltdown yesterday. US President George W. Bush warned that failure to act to save the rescue plan would inflict "painful and lasting damage to the economy". "Congress must act," Bush demanded in brief comments yesterday at the White House. European and Asian leaders, whose economies face growing uncertainty after the defeat of the US relief package, urged the US to find a quick solution for the good of its economy and the global financial system. Bush said his administration would work with congressional leaders to get the package back on track.
The House voted 228-205 on Monday against the bill designed to rescue Wall Street. That triggered the biggest one-day sell-off on Wall Street, as the Dow Jones industrial plummeted by 777 points, even more than after the Sept 11 terror attacks. Both presidential candidates, John McCain and Barack Obama, called on lawmakers of their parties to keep working on an acceptable plan. Bush noted that the $700 billion in the proposed bailout was huge, but was dwarfed by the $1 trillion in lost wealth that resulted from Monday's stock market plunge. He also said the actual cost to taxpayers should be much less ultimately, arguing that once markets recover, assets are likely to gain value over time. The rescue package and the faltering US economy were also the major issues on the presidential campaign trail as both McCain and Obama addressed the subject. Both called for raising federal deposit assurance on deposits, savings accounts and bank certificates of deposit from the present $100,000 to $250,000. "The first thing I would do is say, 'Let's not call it a bailout. Let's call it a rescue," McCain said in a CNN interview. He said "Americans are frightened right now" and it is the job of political leaders to give them both an immediate solution and a longer-term approach to the problem. Interviewed on Fox news network, McCain said: "I'm confident we'll have a bill and it will rescue the American economy." McCain announced a brief suspension of his campaign last week to return to Washington for negotiations on the bailout but would not say whether he was contemplating that again. "I will do whatever is necessary" to help, he said. Top congressional and White House officials were stunned when the House rejected the massive rescue plan, and a host of lawmakers said yesterday that they felt Congress should persevere in its attempt to find consensus on a proposal that can be passed. Obama issued a statement yesterday saying lawmakers should not start from scratch as they weigh their next move. He said that significantly increasing federal deposit insurance would help small businesses and make the US banking system more secure as well as restore public confidence in the US financial system. Obama also said further inaction would be catastrophic for the economy and for American families. In his comments from the Diplomatic Reception Room of the White House, Bush pointed to Monday's drop in the Dow Jones industrials. "The dramatic drop in the stock market that we saw yesterday will have a direct impact on retirement accounts, pension funds and personal savings of millions of our citizens," he said. "And if our nation continues on this course, the economic damage will be painful and lasting".
He said he was disappointed by Monday's House vote but "this is not the end of the legislative process." "I recognize this is a difficult vote for members of Congress," Bush said. "And I understand that. But the reality is we are in an urgent situation and the consequences will grow worse each day if we do not act." He said this was a critical moment for the US economy. "And we need legislation that decisively addresses the troubled assets now clogging the financial system, helps lenders resume the flow of credit to consumers and businesses, and allows the American economy to get moving again." Stocks staged a partial rebound early yesterday, as the Dow Jones industrials rose nearly 200 points in early trading. Agencies (China Daily 10/01/2008 page1) |
