US/World financial crisis

Bush promises bailout package "fast"

Article published on the 2008-09-26 Latest update 2008-09-26 14:33 TU

Bush with Congress leaders
(Photo: Reuters)

US President George Bush on Friday morning promised that there will be an agreement on the financial bailout which talks on Thursday failed to agree. Markets around the world fell after the plan hit deadlock. The decline was made worse by the US's biggest bank failure yet - Washington Mutual was taken over by JP Morgan Chase. US, European and Asian central banks pumped money into the banking system in an attempt to shore up the system.

"There is no disagreement that something substantial must be done," Bush said in a brief statement at the start of Washington's working day, adding that disagreements had to be aired for the sake of democracy. 

"We’re going to get a package fast," he added, promising that "Republicans and Democrats will come together" to ensure that happens.

Shares on Wall Street fell at opening on Friday, following  markets in Asia and Europe, with London's FTSE and Paris's Cac-40 losing 1.71 per cent.

The US Federal Reserve and central banks in Europe and Asia made tens of billions of dollars available to banks to increase cash available.

JP Morgan bought Washington Mutual for 1.9 billion dollars (1.3 billion euros). Its shares have fallen 85 per cent this year and Standard and Poor credit ratings agency estimated it had over 14 billion dollars (ten billion euros) of debt.

Despite expectations that they were more or less a formality, Thursday's talks on the US bailout broke down after Republicans objected to government intervention into private enterprise.

Furious Democrats blamed Republican presidential candidate John McCain.

"I think this was a campaign ploy for Senator McCain." said Barney Frank, the Democratic chair of the House of Representatives, who later said that he expected talks to continue on Friday.

"I'm very hopeful we're making progress, I know we're making progress," McCain told ABC News television.

McCain and his supporters are "trying to show that the Republicans were even more distant from the Bush administration than the Democrats," says Paris-based analyst Philip Golub. "And now we’re in a state of chaos."

"The American credit system right now is not far from collapse," he told RFI. "It’s totally frozen; no lending is occurring."

The Democrats have called for limits on pay for executives whose companies are rescued and intend to propose a 56.2 billion dollars (39 billion euros) package to help struggling families.

New figures in the US show unemployment at its highest for seven years and house sales at their lowest since 1991.

The giant General Electric corporation has issued a profit warning, while computer-maker Hewlett-Packard says it will lose 24,000 jobs, 9,000 of them in Europe, Africa and the Middle East, over the next three years.