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Last update - 09:20 01/10/2008
U.S. stocks bounce as senate agrees to vote Wed. on bailout
By News Agencies
Tags: financial bailout 

The U.S. Senate will vote on Wednesday night on a new version of the $700 billion bailout package for Wall Street, rekindling hopes that the credit crisis can be stemmed before claiming yet more banks and causing further damage to a weakening global economy.

U.S. stocks, after suffering their worst fall in 21 years on Monday after the House of Representatives rejected the original package, roared back on Tuesday as investors bet Washington would manage to salvage the package and stabilize the financial industry.

The Standard i Poor's 500 index shot up by more than 5 percent, its biggest one-day gain in six years, and Asian stocks followed suit on Wednesday, though gains there were tempered by further evidence of economic slowdown.
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The revised package the Senate unanimously agreed to vote on would increase to $250,000 from $100,000 the amount of individual deposits insured by the Federal Deposit Insurance Corp (FDIC), seeking to shore up consumer and business confidence in banks.

It may also win over lawmakers trying to sell their constituents on an expensive plan funded by taxpayers and seen as benefiting wealthy financiers.

If the bailout package passes in the Senate, as expected, it will put more pressure on the House of Representatives to follow suit when it meets again on Thursday.

President George W. Bush, Treasury Secretary Henry Paulson and the two candidates hoping to succeed Bush as president, Republican Sen. John McCain and Democratic Sen. Barack Obama, reaffirmed their support for a bailout plan on Tuesday.

Both Obama and McCain said they would return to Washington for the vote, due to take place sometime after a series of votes starting at 7:30 P.M.

The plan, which would allow the Treasury to buy toxic mortgage-related assets from banks, has been the main hope for government action to unlock credit markets and head off a deeper economic downturn in the United States and abroad.

"We're right at the moment where action is needed," Dominique Strauss-Kahn, managing director of the International Monetary Fund, told Reuters. "A non-perfect plan is better than no plan at all."

Global money markets remained frozen on Tuesday, and London interbank offered rates shot to record levels, indicating banks were not lending to each other. The rate for overnight dollar loans rose to nearly 6.9 percent from just over 2.5 percent on Monday. Overnight dollar borrowing costs stayed near 6 percent in Asia on Wednesday.

U.S. regulators were also readying a revision of he "fair value" accounting rule that has led to massive charges on mortgage-related assets, and has been blamed for deepening the credit crisis. That would mean U.S. banks would not need to mark hard-to-price assets down to firesale prices.

After claiming some of the biggest names on Wall Street in recent weeks, showckwaves from the crisis engulfed Europe and beyond this week.

Ireland unveiled a blanket guarantee for savings held by its banks and for the second time in a month Russia briefly shut down its stock markets.

France, Belgium and Luxembourg poured 6.4 billion euros into Franco-Belgian bank Dexia to avoid defaults on its loans, and France promised new bank measures to help depositors.

Dutch-Belgian banking and insurance group Fortis, partially nationalized earlier this week, halted $4 billion worth of asset sales to China's Ping An and Deutsche Bank.

Shares of the U.S. banks seen emerging with a strengthened hand after the crisis, including Citigroup Inc, JPMorgan Chase i Co and Bank of America Corp, shot higher on Tuesday.

Hopes for a revived rescue deal supported the dollar and lifted oil prices above e102 a barrel. But weak economic data from Japan, combined with fears of more corporate profit warnings limited Asian stock gains to around 1 percent.

"We've still got slowing global growth and still got a credit crisis. So I just think there's going to be ongoing volatility from here on in for the rest of the year," said ABN AMRO equity strategist Greg Goodsell in Sydney.

Hedge fund managers have also been bracing for a wave of investors to cash out as money rushes to safe haven assets.

One of the first signs of how quickly the economic pain is spreading from Wall Street to Main Street will come with Wednesday's release of U.S. auto sales for September, when the financial crisis began to topple banks and freeze credit.

The White House announced on Tuesday that Bush approved a mammoth spending bill that includes a $25 billion loan package for automakers, which faced far less ire than the $700 billion Wall Street plan.

"Wall Street as we knew it is already toast - beyond bailing out - but the public still thinks of this legislation as bailing out Wall Street," said Donald Straszheim, vice chairman of Roth Capital Partners in Los Angeles. "Until this
perception changes, do-overs to quickly pass similar legislation won't fly."

Also Tuesday, Bush warned that failing to pass a financial rescue plan would bring severe consequences to the U.S. economy.

Congressional leaders scrambled Tuesday to find enough changes to sell the multibillion-dollar U.S. financial rescue to their rank-and-file, with long-distance prodding from John McCain and Barack Obama on the U.S. presidential campaign trail.

"Congress must act," Bush declared in an appeal that McCain and Obama echoed.


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  • Washington Mutual collapses in biggest bank failure in U.S. history
  • Bush presents $700b bailout plan
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      1.   September 29th, the first day of World Economic Winter 20:40  |  Clickfool 29/09/08
      2.   Historical decision with unprecedented consequences 22:19  |  Mark B. 29/09/08
      3.   Obama speech in Colorado 22:22  |  Kareem 29/09/08
      4.   I am not yet sold. 23:17  |  American 29/09/08
      5.   A CNN reporter blamed the "Jewish holidays" for the failure..... 00:01  |  Swiss (Dino) 30/09/08
      6.   I never thought I would say it: Bravo GOP 00:03  |  Mark B. 30/09/08
      7.   Kareem is it online yet? 00:08  |  MaryRose 30/09/08
      8.   b 00:13  |  b 30/09/08
      9.   HAHA! 00:20  |  rigma 30/09/08
      10.   Repercussion of rejection 00:30  |  Brod 30/09/08
      11.   What is the `plan B?` 00:35  |  Maureen Ann 30/09/08
      12.   Dino, Deutsche Bank and UBS about to fall 00:45  |  Mark B. 30/09/08
      13.   Swiss (Dino) 00:46  |  Jane 30/09/08
      14.   Democrats playing politics 01:14  |  Christopher 30/09/08
      15.   # 14 christopher 01:36  |  Axel 30/09/08
      16.   #14 Christopher, one question than please 01:36  |  Mark B. 30/09/08
      17.   # 12 Mark B. 01:53  |  Swiss (Dino) 30/09/08
      18.   # 13 Jane, relax I was just kidding....... 02:02  |  Swiss (Dino) 30/09/08
      19.   #17 Dino, yeah sure... 02:08  |  Mark B. 30/09/08
      20.   We are all in the deep do do 02:13  |  Chris Linthwaite 30/09/08
      21.   The end of the Globalisation experiment? 02:15  |  Chris Linthwaite 30/09/08
      22.   SWISSS...Congress went on "vacation" for a month 02:17  |  Lynn 30/09/08
      23.   Don`t worry Jane 02:18  |  Roo 30/09/08
      24.   # 6 Mark B....95 Democrats voted against it 02:20  |  Lynn 30/09/08
      25.   Jane - and do what? 02:22  |  Mark Lincoln 30/09/08
      26.   # 19 Mark B. 02:26  |  Swiss (Dino) 30/09/08
      27.   # 16 Mark B.......Pelosi`s little speech wasn`t the reason 02:29  |  Lynn 30/09/08
      28.   # 19 Mark B....you are a gem!!! 02:32  |  Lynn 30/09/08
      29.   Where the world can safely invest now 02:32  |  Mark Lincoln 30/09/08
      30.   and whos is to blame for this???????? 02:32  |  Joe 30/09/08
      31.   Deutsche Bank/UBS-MarkB Swiss 02:36  |  John Syracuse 30/09/08
      32.   Maureen Ann....suck it up! 02:45  |  Lynn 30/09/08
      33.   #9 rigma....no, it was the 25 billion for auto industry bail outs 02:49  |  Lynn 30/09/08
      34.   #Lynn. Your cupcakes are soggy... 03:33  |  Maureen Ann 30/09/08
      35.   Russia, Iran and Venisula, China. the Oil Ballon will Burst 03:42  |  John 30/09/08
      36.   Mark Lincoln 04:19  |  Jane 30/09/08
      37.   Maureen Ann 04:30  |  Jane 30/09/08
      38.   #37 Jane. Did you vote Republican in x 2? 05:29  |  Maureen Ann 30/09/08
      39.   Lynn - Working Harder than in 2006 05:41  |  Mark of Lewiston 30/09/08
      40.   Tomorrow is Significant 05:59  |  Mark of Lewiston 30/09/08
      41.   Maureen Ann 06:12  |  Jane 30/09/08
      42.   Maureen Ann 06:18  |  Orlando 30/09/08
      43.   Maureen Ann 07:07  |  Cipora Julianna Kohn 30/09/08
      44.   # 13 By the way, Jane....... 08:35  |  Swiss (Dino) 30/09/08
      45.   #43 Ciporah Julianna Kohn. "The whole world." 09:05  |  Maureen Ann 30/09/08
      46.   Now you guys..... 09:21  |  Clickfool 30/09/08
      47.   For Maureen Ann again # 38 09:26  |  Clickfool 30/09/08
      48.   Lynn in la la land 09:29  |  bronxite10 30/09/08
      49.   Iy`s waiting for the JEWISH NEW YEAR HOLIDAY 09:32  |  Dagma 30/09/08
      50.   Background 09:36  |  Roy Galutia 30/09/08
      51.   Cipora Julianna Kohn # 43 - Waiting for Jewish Holidays 09:55  |  Dagma 30/09/08
      52.   Poor little lambs, who`ve lost their way, bah, bah, bah 10:18  |  Clickfool 30/09/08
      53.   Chris Linthwaite # 20 - Not the next 24 hours..... 10:51  |  Dagma 30/09/08
      54.   The congressional vote on the bailout is not as important 13:14  |  Buick from Boca 30/09/08
      55.   #25 Mark Lincoln....in a way I agree with you 15:19  |  Lynn 30/09/08
      56.   #34 Maureen.....You really should get some facts straight 15:22  |  Lynn 30/09/08
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      58.   #47 Clicky .....the "disaster" started in 1995 16:20  |  Lynn 30/09/08
      59.   When asked why so many Dems turned it down 17:01  |  Lynn 30/09/08
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