US/World economy

Finance bailout to be worth 700 billion dollars, blame game begins

Article published on the 2008-09-21 Latest update 2008-09-21 11:04 TU

Bush on Saturday
(Photo: Reuters)

The US administration is asking for 700 billion dollars (485 billion euros) to tackle the financial crisis. The rescue plan would give Treasury Secretary Henry Paulson extended powers over the next two years. Democrats have promised to work with Republicans on the plan but have criticised President George Bush's policies, while European leaders blame the US and Britain for contributing to the crisis.

"This is a big package because it was a big problem," Bush declared on Saturday, confessing that his first instinct had been to trust the markets but that advisers had changed his mind.

The assets which no-one now wants will be bought up "through market mechanisms where possible", the Treasury said.

Bush's Democrat opponents say they will work with Republicans to produce a plan. But House of Represntatives Speaker Nancy Pelosi vowed to fight for low-income families whose homes are threatened.

"We must insulate Main Street from Wall Street and keep people in their homes by reducing mortgage foreclosures," she said.

Senate Majority leader Harry Reid blamed Bush's policies for the crisis.

"It is now self-evident that the Bush administration's extreme hands-off policies have been disastrous,' he said. "The American people have every right to be outraged that we are at this point."

French Finace Minister Christine Lagarde declared that the "systemic risk" is now over but repeated European calls for more transparency in finance and business.

"Company accounts must show all financial activities," she said.

German Chancellor Angela Merkel has accused the US and Britain of blocking proposals for transparency which could have prevented the crisis.

Merkel told the German magazine Münchner Merkur that European governments have proposed agreements to fight speculation and impose transparency at international meetings such as the G7, which she chaired herself last year.

But London and Washington have consistently backed the money-markets in opposing controls or a code of conduct, she added.