Senate passes revised bailout Bill

House of Representatives to re-vote on Friday.

The US Senate passed a $700 billion financial market rescue package loaded with inducements for the House of Representatives to approve the measure, following the House's rejection of an earlier version.

The legislation, approved last night on a 74-25 vote, authorises the government to buy troubled assets from financial institutions rocked by record home foreclosures.

It contains two provisions favoured by House Republicans: One raises the limit on federal bank-deposit insurance; the other reiterates the authority of securities regulators to suspend asset-valuing rules that corporate executives blame for fuelling the crisis.

The Bill's proponents cited the record 778-point drop in the Dow Jones Industrial Average after the House's 228-205 defeat of the legislation September 29 as evidence of the urgency to stabilise the banking system. They suggested that the market reaction may spur some House Republicans to change their minds when the Bill comes to a vote, likely tomorrow afternoon.

Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, said he hoped the vote “will send a very strong signal even to the Asian markets and others''.

Asian stocks and US futures, however, fell on concern the package won't be enough to avert a recession, with futures on the Standard & Poor's 500 Index falling 1.3 per cent and the MSCI Asia Pacific Index slipping 1.7 per cent. At the time of going to press, the Dow was down by 2.31 per cent and the FTSE closed 1.80 per cent down.

The extra measures may help sway some Republicans. “They only need 12 votes,'' Kansas Representative Todd Tiahrt, who voted against the bailout, said in an interview with Bloomberg Television.

Still, House passage is far from certain. House Majority Leader Steny Hoyer told MSNBC News yesterday that no Democrats who opposed the measure earlier this week have pledged to back it.

“We don't have any more Democrats at this hour,'' he said. Some Republicans said they also weren't budging.

President George W Bush said in a written statement after the vote that “the Bill the Senate passed is essential to the financial security of every American.'' He said the House should follow suit in approving the proposal.