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US Congress clears $700 billion bailout package

October 04, 2008 17:56 IST

The US Congress approved a revised $700 billion package to bail out the beleaguered US financial sector after the House of Representatives on Friday cleared the historic measure four days after it rejected an earlier plan that stunned the global markets.

The House okayed 263-171 in a make or break vote the unprecedented government intervention designed to pull the US economy out of the brink and sent it to President George W Bush for certain signature into law. The Senate on Wednesday passed 74-25 a revised version of the bailout package.

Calling the bipartisan Congress vote a "bold" step, Bush said the package will help the US economy weather the financial crisis.

The revised package aimed at buying up the bad debts of failing institutions included sweetners on extending bank deposit insurance and expired tax breaks in a bid to get more Republicans behind the legislation.

Several law makers dropped their opposition to the bill when it came up for vote today capping two weeks of turmoil in the Congress and the Wall Street.

The Bill was tweaked by the Senate which added about $100 billion dollars in new tax breaks in an initiative to get the House support for the new version.

Only 85 Republicans voted for the bailout in the 228 to 205 defeat for the bailout on Monday and Democratic House leaders said before the vote they needed 100 members of the minority party to ensure passage.

The plan lets the government spend billions of dollars to buy bad mortgage-related securities and other devalued assets from troubled financial institutions. It is aimed at allowing frozen credit to begin flowing again and prevent a dangerous recession.

Bush said government intervention was clearly essential to deal with the serious challenges dogging the American economy and provide new tools to relieve financial system stress.

The leader of the House, Speaker Nancy Pelosi, a Democrat, said the bill was needed to "begin to shape the financial stability of our country and the economic security of our people."

"We all know that we are in the midst of a financial crisis," House Republican Leader John Boehner, said shortly before casting his vote for government intervention in private capital markets that was unthinkable only a month ago.

"And we know that if we do nothing, this crisis is likely to worsen and to put us into an economic slump like most of us have never seen," Boehner added.

"It is a difficult vote. It is a vote we must win for the American people," House Speaker Nancy Pelosi said while finishing up the debate lasting two and a half hours.

Treasury Secretary Henry Paulson pledged quick action to get the program to buy disressed mortgages and securities backed by mortgages from banks and other institutions up and operating.

"I know some Americans have concerns about this legislation, especially about the government's role and the bill's cost," Bush said after the passage of the package in the Congress.

"As a strong supporter of free enterprise, I believe government intervention should occur only when necessary. In this situation, action is clearly necessary." "Ultimately, the cost to taxpayers will be far less than the initial outlay," Bush said.



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