White House and party leaders push a revised financial rescue plan as markets react coolly and Europe faces its own crisis

by Theo Francis and Jane Sasseen

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After another weekend of frenzied negotiations and posturing, the House of Representatives looked likely to vote betimes afternoon Monday, Sept. 29, put on a 110-page bill that would give the Treasury extravagant authority to intervene in U.S. pledge and securities markets, in a bid to stabilize the financial system. Despite pockets of opposition from Republicans, lawmakers, legislative aides and lobbyists seemed cocksure it would pass the House and, by Wednesday, the Senate as well. President Bush has said he exercise volition sign the bill.

Shaped above the top the weekend, lawmakers from both parties announced the broad framework of a pact on Sunday afternoon, Sept. 28, through legislative power distributed soon afterward. Many details of the $700 billion plan, first proposed by Treasury Secretary Henry M. Paulson Jr., remained vague, and hostility by conservative Republicans in the House stayed strong. With investors in markets around the world anxiously awaiting progress on the bundle, legislators feared that further delays would likely consideration another rout during stocks.

After days of emphatic negotiations, Paulson released a statement early Sunday evening, lauding the bipartisan efforts and pledging to move as quickly as possible to begin implementing the legislation because soon as it is signed. "Members on both sides were focused on the erect things: creating an effective program that have power to be implemented in a short time and effectively, and doing everything possible to protect the taxpayers," Paulson said in the narrative. "Quick, effective, and bipartisan representation sends a extraordinary to investors large and atomic, here and abroad, that we are committed to taking the essential actions to protect our financial system and our economy."

The altercation without ceasing the House get the better of takes site in countervail to the backdrop of a still-volatile stock market, which opened sharply lower despite news of a legislative deal; by mid-day the S&P 500 was down more than 4%, to 1,163.29. Nor have events around the waited for the Congress to act: Citigroup aforesaid Monday spring-time that it would buy Wachovia, in a deal brokered by means of the Federal Deposit Insurance Corp.; credit appeared to be tightening across much of the economy Monday sunrise.

President George W. Bush issued a statement calling the bill necessary "to help protect our economy against a system-wide breakdown." He added: "The bill will help sanction access to credit so American families can meet their daily needs and American businesses can make purchases, ship goods, and meet their payrolls. And this plan sends a strong signal to markets on every side of the nature that the U.S. is serious about restoring courage and stability to our financial system. Without this rescue plan, the costs to the American economy could have being disastrous." Early in the day, both Presidential contenders said they would likely support the bill.

Meanwhile, the financial crisis seemed to cascade in Europe. As lately as last week, European officials said they had not at all intention of mimicking a U.S.-style bailout of Old World banks, claiming their financial situation wasn’t as dire (BusinessWeek.com, 9/26/08).

But the quickly deteriorating fiscal situation at Brussels-based banking giant Fortis (FOR.BR), whose shares plunged 35% last week on concerns over its balance sheet, prompted an emergency $16.3 billion bailout engineered over the weekend by the governments of Belgium, Luxembourg, and the Netherlands. According to a Bloomberg promulgate, the Belgian government will buy a 49% stake in the bank’session Belgian business for $6.9 billion, while Holland will pay $5.8 billion towards the bank’s Dutch employment. Fortis—one of the victorious partners in a hard-fought takeover battle last year for Dutch investment rim ABN Amro—was hammered from one to another concerns that its capital base had been too depleted by dint of. the acquisition.