World Financial Crisis

House approves bailout plan

Article published on the 2008-10-03 Latest update 2008-10-04 08:51 TU

Nancy Pelosi signs the financial bailout bill
(Photo: Reuters)

President George Bush has welcomed a second vote in the House of Representatives, which approved a 700 billion dollar bailout of the American banking system. The vote was the second in a week, following rejection on Monday of the original plan. The Senate approved the measure on Thursday. President Bush signed off on the legislation shortly after the vote.

Speaking in the White House Rose Garden, Bush warned that it would take some time for the measure to have an effect. The president also acknowledged that some would still have reservations about the plan, but that American citizens could expect that the tax dollars spent on the bailout would be paid back.

Traders on the floor of the New York stock exchange cheered as the plan's approval was announced.

The House adopted the new version after the Senate added about 150 billion dollars in new tax breaks to win Republican votes. The package aims to buy up the bad debts of banking institutions, and gives taxpayers a stake in companies, giving them the possibility to make a profit if conditions on the market improve.

The amended bill also raised the limit on federal insurance for bank deposits from 100,000 dollars to 250,000 dollars, a move aimed at reassuring savers that their money is safe in banks and at avoiding mass withdrawals.

 

The plan also limits payouts to executives and bans "golden parachutes" - exceptional bonuses for CEOs or other executives who lose or leave their jobs - at companies participating in the plan.

 

House Speaker Nancy Pelosi affirmed that that the bill would create accountability in the financial sector, saying that the legislation was "about building an economy that is focused on the middle class...we are all believers in the free market..but recently, left unregulated...they have created chaos. But that was then, this is now."

 

President Bush signed the bill into law on Friday before leaving Washington for the weekend to raise money for fellow Republicans and to spend time on his Texas ranch.