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US/World financial crisis

Financial bailout close, claim lawmakers

Article published on the 2008-09-28 Latest update 2008-09-28 09:42 TU

House Speaker Nancy Pelosi (L) and Rep Barney Frank (R) speak to reporters(Photo: Reuters)

House Speaker Nancy Pelosi (L) and Rep Barney Frank (R) speak to reporters
(Photo: Reuters)

Early Sunday morning US Treasury Secretary Henry Paulson and House of Representatives Speaker Nancy Pelosi said that there has been "great progress" towards agreement on the bailout package for the country's crisis-hit finance system. Congressional staff members worked through the night to finalise it but negotiators say that it still has to be "committed to paper".

"We have made great progress," Pelosi said, echoing Paulson's earlier assessment and promising that the deal would protect the interests of ordinary Americans.

But she added, "We have to get it committed to paper, so that we can complete, formally agree."

Senate Democratic Majority Leader Harry Reid said there had been a "breakthrough", which he attributed to a last-minute intervention by Pelosi, and predicted that a formal announcement can be expected on Sunday.

But it is still not clear that agreement will be reached before markets open Monday.

Republicans, who unexpectedly held up agreement this week, insist that they will examine the wording of the deal and consult colleagues before giving their agreement.

No details have been officially announced but the New York Times claims to know some of the contents. They include pay limits for executives whose firms seek help, more aggressive efforts to prevent home foreclosures, a government stake in some companies and oversight by a congressional panel.

On Saturday President George Bush admiited that low-paid Americans might resent bailing out financiers.

"You make sacrifices every day to meet your mortgage payments and keep up with your bills," he said in his weekly radio address. "When the government asks you to pay for mistakes on Wall Street, if does not seem fair."

With the US auto industry facing uncertainty, the Senate this week agreed 25 billion dollars (17 billion euros) for carmakers to finance innovation. The financial press has recently speculated that the giant General Motors company could face bankruptcy.

In an interview with French newspaper Journal du Dimanche, International Monetary Fund chief Dominique Strauss-Kahn says that the world faces the same sort of "financial anarchy" as it did in 1944 when the fund was set up.

He said that the IMF should tighten control of financial markets, saying that it is "ready to do what is required if we are given the mandate".