Relief as $700bn rescue package hammered out
Friday September 26 2008
Wall Street shares closed higher yesterday evening as investors breathed a sigh of relief on news that US politicians have reached a basic agreement on a $700bn bailout plan for the faltering American financial system.
The tentative deal paves the way for the US Treasury to buy hundreds of billions of 'toxic' mortgage-related assets from embattled banks.
It should include provisions on oversight of the programme, limits on executive pay and a section on home ownership preservation, said Christopher Dodd, chairman of the Senate Banking Committee.
Negotiations
However, there still appeared to be a stand-off by the time Wall Street closed over whether the emergency bill, the subject of intense negotiations all week on Capitol Hill, will allow for bankruptcy judges to change mortgage terms for beleaguered homeowners.
"We believe that we're prepared to act expeditiously on a package" that will "send a message to the markets," Senator Dodd said after emerging from a negotiating session.
The Dow Jones Industrial Average closed up 1.8pc, having pulled back from its highs as the session came to a close.
The S&P 500 index added 2.1pc.
The breakthrough was secured ahead of an emergency meeting between US President George Bush and the two men vying to succeed him, Republican John McCain and Democrat Barack Obama.
The agreement must still be passed by the House of Representative and Senate, and signed into law by the president. House Financial Services Committee Chairman Barney Frank said it wasn't clear how many House Republicans would support the measure. Senator Robert Bennett, a Utah Republican, predicted it would pass both chambers.
Predicting an evening of horse-trading before a final agreement is reached, the US House of Representatives' Republican leader, Senator John Boehner, said his party has not yet agreed to a deal, but progress was encouraging.
President Bush warned on Wednesday night that "without immediate action by Congress, America could slip into a financial panic, and a distressing scenario would unfold".
Earlier, Irish shares closed in positive territory, in line with most other European markets, amid rising optimism that US Congressional leaders were close to an outline agreement on the plan.
The Iseq Overall Index ended yesterday's session up 1.4pc at 3,826.18 points.
- Joe Brennan
