Click to play videoWashington: The US Senate approved on Wednesday a historic $700 billion bailout of the US financial industry, which the White House and lawmakers said would help avert global economic chaos that could cost American businesses and jobs.
The Senate voted 74-25 for the bill, which also includes a package of tax breaks for businesses, energy and the middle class, and an increase in bank deposit insurance.
The measure now goes to the US House of Representatives for a vote that is likely on Friday.
Amid warnings that failure to act could plunge the country into a depression, more than 60 Senators voted in favor, exceeding the majority needed to send the measure to the House of Representatives, probably for a vote on Friday.
This version of the bailout plan has also increased the Federal Deposit Insurance Corp cap from 1 lakh to 2.5 lakh to help small businesses. The changes are aimed at the public perception that this bill will only help Wall Street, banks and well-heeled executives.
The House had rejected a similar measure on Monday, sending global markets into a tailspin, so Congressional leaders added two sweeteners to the bill – a tax cut and extended federal protection for bank deposits – that could turn "no" voters into supporters.
A group of representatives defended their vote on the bill then, stating that there are other options that have not haven’t been utilized.
"What we're saying is use every tool in the box that's appropriate for this situation," said Democrat from Texas, Lloyd Doggett.
But others in the Senate view the Bill’s prompt passage as a necessity, not an option.
"It really is an issue that goes right to the heart of Main Street. If you don't have credit in America, then the Main Street can't function," said Republican from New Hampshire Senator Judd Gregg.
Senator Harry Reid, Democrat and the Majority Leader said, “I'm hopeful and confident that all sides, House and Senate, White House, will work together to achieve a goal that will be good for the American people."
Both Presidential nominees Barack Obama and John McCain were in support of the Senate plan which includes raising the FDIC Insurance cap from US $100,000 to US $250,000.
But some House members on Wednesday warned that problems may persist even with Senate approval of the plan.
"If, and it's rumored that the Senate intends to jam through the same bill with only with a change on the FDIC limit. If they do that without a real pay for, I think there's still going to be tremendous problems in the House," said Oregon democrat, Peter DeFazio.
President Bush has warned that the situation is urgent and the consequences will grow each day if this bill is not passed.
Central bankers and pensioners worldwide were counting on the rescue plan to empower the US Treasury to buy distressed assets from financial firms, clean up their balance sheets and jump-start lending.
The vote came amid early trade in Asian markets and the dollar climbed near a one-year peak against a basket of currencies while Japanese stocks extended losses.
The credit crisis also reverberated among European banks while recessionary signals mounted in the United States.
US factory activity shrank in September to its lowest since the 2001 recession and major automakers reported plunging US sales for September, led by a 34 per cent slide at Ford Motor Co.
In Europe, France and Germany clashed over the idea of a US-style financial rescue fund for Europe amid further signs of contagion from the global credit crisis.
Italy's UniCredit became the latest bank under scrutiny after backing away from its 2008 earnings targets. The US vote capped another whirlwind day in the markets in which shares of bellwether US conglomerate General Electric Co plunged as much as 9 per cent on concerns about future earnings until super-investor Warren Buffett took a $3 billion stake.
(With inputs from Reuters)
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