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    U.S. Senate urged to back revised bank rescue

    01.10.2008 - 09:43 | Son Güncelleme:

    The U.S. Senate prepared to vote Wednesday on a revised $700 billion plan aimed at halting the worst financial crisis since the Great Depression. (UPDATED)

    European policymakers urged the U.S. Congress forward, and the chief executive of Germany's Deutsche Bank said Europe should be prepared to take similar steps.

    The Senate vote, expected after 7:30 p.m. EDT (2330 GMT), follows a stunning defeat for the bill in the U.S. House of Representatives on Monday.

    Lawmakers revised the package in talks on Tuesday to increase to $250,000 from $100,000 the limit on individual bank deposits guaranteed by the government. The change was intended to appeal to Republicans who voted against the bailout plan on Monday.

    The rescue package would allow the Treasury to buy toxic mortgage-related assets from banks to unfreeze credit markets and arrest the crisis, which has toppled Wall Street firms, frozen lending among banks, and overshadowed campaigning for the U.S. presidential election on Nov. 4.

    The U.S. stock market roared back on Tuesday after the bill's defeat in the House sent it plunging the day before.

    Asian and European markets began the final quarter of 2008 on an upbeat note Wednesday, but U.S. stock futures fell, indicating U.S. stocks would open lower.

    "Blind faith doesn't work this time after Monday's disappointment," said Andre Bahkos, president of Princeton Financial Group in Princeton, New Jersey.

    People are cautious and they lack confidence that a bailout plan will be a one-step solution. It won't be."

    Jean-Claude Juncker, chairman of the euro zone's finance ministers, said the United States had to adopt the plan, a view echoed by Russian finance minister Alexei Kudrin.

    "It is the responsibility of the United States to other countries," Kudrin said.

    The chief executive of Germany's Deutsche Bank said Europe should look at a U.S.-style rescue.

    "If the United States passes such a package, Europe should be prepared to find similar solutions," Josef Ackermann told reporters.

    If the Senate passes the bill on Wednesday, it must still be approved by the House.

    Rep. John Boehner, the top Republican in the House, believes the changes in the Senate version of the bill will appeal to Republicans who blocked it on Monday, a spokesman said.

    Republicans who voted against it cited complaints from their constituents that taxpayers were being asked to bail out Wall Street. After stock markets fell on Monday, cutting the value of retirement plans for millions of Americans, those complaints turned to support for the package, according to members of Congress cited in news reports.

    And some of the biggest U.S. companies, including Verizon Communications Inc, Microsoft Corp and General Electric Co, put pressure on Congress to act, The Wall Street Journal reported.

    Both U.S. presidential candidates have also urged lawmakers to get the amended package passed.

    Manufacturing industry in the developed world contracted in September as global financial turmoil hurt businesses, and all signs pointed to more economic weakness ahead.

    Data from Japan, the euro zone and Britain were all weak and added to the sense of urgency in bringing some stability to the financial markets.

    In Europe, French President Nicolas Sarkozy will host a meeting of senior EU officials on Saturday to coordinate a response to the crisis washing across the Atlantic.

    European Commission President Jose Manuel Barroso said the EU needed stronger financial supervision and greater consistency in national deposit guarantee schemes.

    The financial chaos, which has prompted comparisons with the Great Depression of the 1930s, has redrawn the banking landscape in the United States and Europe.

    Wall Street giants Bear Stearns, Lehman Brothers and Merrill Lynch have been swallowed by rivals, and gone is the investment banking model that dominated for decades after Goldman Sachs and Morgan Stanley sought commercial bank status.

    Overnight money market strains eased in Europe on the first day of a new financial quarter, but longer-dated rates remained almost paralyzed, with indicated rates still climbing.

    Photo: AFP

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