US Financial Rescue Plan ‘Needs Work’

25 09 2008

US political leaders are continuing talks on a $700bn (£380bn) bail-out plan to revive the finance sector.

After several hours of talks with President George W Bush, members of congress said more work was needed.

Presidential candidate Barack Obama, present at the talks with his rival John McCain, said progress had been made on several key points.

Earlier, a leading senator said they had reached “fundamental agreement” on the principles of a deal.

But the Senator, Christopher Dodd, chairman of the Senate Banking Committee, later said it could take beyond Friday’s original target date to finish work on the plan before it can go to a vote in Congress.

Republicans and Democrats have been worried about who will fund the plan.

Mr Bush has said he hoped there would be agreement on a rescue deal “very shortly”.

Legislators were “working on it,” said a spokesman for Senate Democratic Majority Leader Harry Reid.

“Still have a lot of issues to be worked on. Making progress. A lot more to discuss,” said the spokesman, Jim Manley, as he left the White House talks.

Earlier, Mr Dodd had said Congress could act in the next few days to pass a bill on the subject.

The plan, as it was first proposed last week, would broadly help finance firms offload bad debt, which has triggered a global credit crisis.

Details of the package were not immediately available but it is tipped to include restrictions on executives’ pay as well as oversight requirements.

The benchmark Dow Jones index rose after Senator Dodd’s initial comments, to close 198.09 points, or 1.83%, up at 11,023.26.

Presidential candidates Barack Obama and John McCain are in Washington for the talks.

The pair are due to hold a presidential campaign debate on Friday, which Mr McCain earlier said should be called off because of the pressing financial crisis.

However, on Thursday evening Mr McCain’s campaign team said the Republican senator had not yet decided whether to attend the debate in Oxford, Mississippi.

Speaking after the White House talks, Mr Obama said he expected to “eventually” get Congressional agreement on the government’s bail-out proposal, but that there was still work to do.

He blamed the financial troubles on “reckless behaviour” on Wall Street and a lack of oversight because regulators were “asleep at the switch”.

The bail-out has been under scrutiny with politicians on both sides nervous about the deal being rushed through too quickly.

Of particular concern has been the issue of pay for the bosses of the firms in question, as well as concerns over the cost of the plan to the US taxpayer.

But both US Federal Reserve head Ben Bernanke and Mr Bush have warned that the lack of a deal would cause a significant set-back to the economy as a whole.


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