Bush signs US$700 billion bailout bill

Treasury head pledges quick action; Paulson says "This was a vote to protect the American people."

October 3, 2008 19:34
3 minute read.
Bush signs US$700 billion bailout bill

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US President George W. Bush has signed into law a far-reaching $700 billion bill to bail out the tottering US financial industry, shortly after it won final approval from Congress. The president signed the measure at his desk in the White House. Photographers were invited in to capture the moment. The president signed the bill after returning from the Treasury Department where he thanked employees for their hard work on the rescue package. With the economy on the brink and elections looming, Congress approved an unprecedented bill to bail out the battered financial industry on Friday. Bush appeared outside the White House not long after the measure was passed by the House of Representatives 263 to 171. That represented the final stage of the legislative process. "There were moments this week when some thought that the federal government could not rise to the challenge. But thanks to the hard work of members of both parties, in both houses, and the spirit of cooperation between Capitol Hill and my administration, we completed this bill in a timely manner," Bush said. The president said he believes in a free-market system and that the government should intervene "only when necessary." He said he thought it represented "decisive action" by Washington to ease the widening credit crunch across the United States. Friday's vote capped two weeks of tumult in Congress and on Wall Street, punctuated by daily warnings that the United States confronted the gravest economic crisis since the Great Depression of the 1930s if lawmakers failed to act. Bush was poised to make a statement on the historic vote. "We all know that we are in the midst of a financial crisis," House Republican Leader John Boehner said shortly before casting his vote for government intervention in private capital markets that was unthinkable only a month ago. "And we know that if we do nothing, this crisis is likely to worsen and to put us into an economic slump like most of us have never seen." Treasury Secretary Henry Paulson pledged quick action to get the rescue program up and operating quickly. Paulson refused to answer questions from reporters about how the auction program will work, but he said he already had Treasury staffers working on those details so that the program will not be delayed once Bush signed it. Talking to reporters minutes after the House of Representatives passed the legislation on Friday, Paulson said, "This was obviously a very important vote. It was a vote to protect the American people ... and their jobs." The leader of the House, Speaker Nancy Pelosi, a Democrat, said the bill was needed to "begin to shape the financial stability of our country and the economic security of our people." An Associated Press tally had showed 22 lawmakers who sent an earlier bailout bill to unexpected defeat on Monday had changed their minds and would vote in favor of the revised legislation, more than the dozen needed. Officials said changes made to the measure had sparked a far smaller number of defections among previous supporters. The Senate passed the measure earlier in the week on a bipartisan vote of 74-25. Stocks are advancing but trading off their highs now that the House has approved the rescue plan. Investors have been anxious for resolution on the government's plan to buy up bad assets from banks and other institutions to shore up the financial industry and help resuscitate credit markets. The Dow Jones industrial average is up 169 at the 10,652 level after trading as high as 311. Meanwhile, the Labor Department said initial claims for jobless benefits had increased last week to the highest level since the gloomy days after the 2001 terror attacks. Employers slashed 159,000 jobs from their payrolls, the most in five years. That came on top of Thursday's Commerce Department report that factory orders in August plunged by 4 percent. In related news, Wachovia announced it had agreed to be acquired by San Francisco-based Wells Fargo & Co rather than by Citigroup. Executives said the new arrangement would keep the Federal Deposit Insurance Corp., on the sidelines, thus preventing any depletion of the government's fund that backs bank deposits. The FDIC said it was sticking behind the Citigroup plan, leaving the fate of the bank in limbo.

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