US bail-out plan provokes doubts

Other News Materials 23 September 2008 00:11 (UTC +04:00)

Doubts over the speed at which the US financial bail-out plan can be introduced have emerged from both Democrat and Republican politicians, reported BBC.

Democrat Congressman Barney Frank said it was "entirely unreasonable" to expect Congress to give the rescue plan the go-ahead quickly.

Urging speed, President Bush said the world was watching to see if "we can act quickly to shore up our markets".

Few details about the $700bn (£382bn) package have been announced.

The uncertainty has caused the Dow Jones share index to fall by 2%.

Meetings took place over the weekend between Federal Reserve head Ben Bernanke, US Treasury Secretary Henry Paulson and members of Congress to try to seek consensus on the plan.

Republican Congressman Christopher Shays said members needed sufficient time to debate the issue.

Democrat Congressman Barney Frank, chairman of the House Financial Services Committee, said Democrats would want certain changes, such as guaranteeing that the pay for bosses of the firms being bailed out was limited.

"The private sector got us into this mess," said Mr Frank.

"The government has to get us out of it. We do want to do it carefully."

But President George W Bush said it "would not be understandable if members of Congress sought to use this emergency legislation to pass unrelated provisions, or to insist on provisions that would undermine the effectiveness of the plan".

The Group of Seven (G7) most wealthy nations said it welcomed the US move and reaffirmed its strong commitment to "protect the integrity of the international financial system".

"We pledge to enhance international cooperation to address ongoing challenges in the global economy and world markets," said the G7.

It added it would do whatever was necessary to ensure stability in the international financial system.

The financial sector has seen huge upheaval in recent days, with Lehman Brothers folding and Merrill Lynch being bought by Bank of America.

Morgan Stanley and Goldman Sachs - for decades independent investment banking firms - requested to change their status that will see them regulated by the Fed.

The move, which means they will expand into the commercial banking sector, arguably marks an end of an era on Wall Street.