The US Senate passed a €487bn rescue package for the nation’s troubled economy today.
President George Bush had said the measures were needed to stave off financial panic and avoid a “long and painful recession”. The Senate passed the Bill by 74 votes to 25.
The upper house of the US Congress rescued the proposals, seen by many Americans as a $700bn (€487bn) bail-out of Wall Street, by adding more than $100bn (€71.75bn) of sweeteners in a bid to win more support from members of the lower house, which rejected the original proposals on Monday.
US presidential rivals John McCain and Barack Obama shook hands on the floor of the Senate before they both backed the Bill, as did Delaware senator Joe Biden, the Democratic vice presidential nominee.
During the debate in the Senate, Democratic presidential nominee Mr Obama said: “What it means is that if we don’t act it will be harder for Americans to get a mortgage for their home, or loans they need to buy a car, or send their children to college.”
Earlier in the day, in a speech at the Truman Library and Museum in Independence, Missouri, his Republican rival Mr McCain said: “There will be a time to fix the blame for all that has happened. But our duty right now is to fix the problem.”
Before the vote, President Bush urged the Senate to take the financial rescue package “very seriously”.
He said the legislation was needed “to stabilise the situation, so it doesn’t get worse”.
Speaking in the Oval Office, he added: “The Bill is different. It has been improved and I am confident it will pass.”
The Senate specialises in high-stakes legislating-by-enticement, and the long list of sweeteners it added was designed to attract votes from various constituencies which opposed the original Bill.
The Senate added $100bn (€71.75bn) in tax breaks for businesses and the middle class and raised the cap on federal deposit insurance from $100,000 (€71,750) to $250,000 (€179,500).
As revised by the Senate, the upper house of the US Congress, the package would extend several tax breaks popular with businesses.
The amendments would keep the alternative minimum tax from hitting 20 million middle-income Americans, and provide $8bn (€5.7bn) in tax relief for those hit by natural disasters in the Midwest, Texas and Louisiana.
The Securities and Exchange Commission also decided to ease rules that force companies to devalue assets on their balance sheets to reflect the price they can get on the market.
The Bill will now move towards a second debate in the lower house of Congress, the House of Representatives which rejected the Bill earlier this week, and is expected to go to a vote tomorrow.
It was the House Republicans who were seen as the biggest obstacle to getting the bill passed, with 133 Republicans and 95 Democrats refusing to back the rescue package.
They seem to be pleased by the Senate amendments, but some conservative House Democrats, known as “Blue Dogs”, will be repulsed by the tax breaks, and could vote no because they have said they do not want to see the country’s deficit run up even further.
A second House vote is unlikely to be taken unless US political leaders are sure the Bill has the support of its members.
The vote against the proposals earlier this week sent the Dow Jones Industrials Average into a record 777.68 point drop – more than on the first day of trading after the September 11 terror attacks – and political and financial leaders will be keen to avoid a repeat of such a scenario.
Success in the House would see it signed into law by the president.
Mr Bush, US Treasury Secretary Hank Paulson and political leaders on both sides say the Bill is necessary to restore confidence and avoid “the real prospect of economic hardship for millions of Americans”.