US lawmakers agree rescue deal

Other News Materials 29 September 2008 02:35 (UTC +04:00)

US politicians have agreed the details of a $700bn Wall Street bail-out package to be sent to Congress for approval, a Republican negotiator says, BBC reported.

Senator Judd Gregg said getting the deal approved soon was "absolutely critical to the state of the markets".

The measures would allow the Treasury to spend up to $700bn (?380bn) buying bad debts from ailing banks in the USA.

It would be the biggest intervention in the markets since the Great Depression of the 1930s.

However, so far few details of the deal are know, and US lawmakers announced once before - on Thursday - that they had reached an agreement, only for the deal to fall apart in subsequent negotiations.

During the past two weeks, the global credit crunch has seen several financial institutions running into liquidity problems, where they cannot get the money to keep their daily business running.

* In the United States' largest bank failure, Washington Mutual was taken over by regulators and sold on to JPMorgan chase

* Several investment banks got into varying degrees of trouble, with Lehman Brothers collapsing, Merrill Lynch seeking refuge in a takeover by Bank of America and Morgan Stanley securing a large capital injection from a Japanese rival

* US insurance giant AIG had to be bailed out by the US government, which effectively took an 80% stake in the firm

* In the UK, meanwhile, mortgage lender Bradford & Bingley is set to be nationalised on Monday morning, with parts of the business sold on to other banks