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Bush warning over bail-out delay

Bush warning over bail-out delay

George Bush says the cost of not acting will be higher than the $700 billion rescue deal

US President George W Bush has warned the US economy is at a “critical moment”, and vowed to get his Wall Street rescue plan through Congress.

He said the consequences would be “painful and lasting” if the $700bn (£380bn) deal rejected by the US House of Representatives was not passed.

He offered reassurances to citizens of the US and wider world that the current political deadlock would be resolved.

The New York stock market opened with prices up after Mr Bush’s statement.

The Dow Jones index was about 2% higher in initial trading, rebounding from Monday’s record losses.

Global shares have seen volatile trading since Monday’s vote.

In Brussels, the European Union earlier urged Washington to live up to its special responsibility and demonstrate statesmanship to resolve the global credit crisis.

‘Not the end’

Mr Bush said at the White House: “We are in an urgent situation and the consequences will grow worse each day if we do not act.”

The economy was depending on “decisive action on the part of our government”, he added.

He said he wanted to “assure our citizens and citizens around the world that this is not the end of the legislative process”.

“Our country is not facing a choice between government action and the smooth functioning of the free market,” he said.

“We’re facing a choice between action and the real prospect of economic hardship for millions of Americans,” he warned.

Republicans and Democrats have been blaming each other for the failure of the rescue plan, which was rejected by 228 to 205 votes in the House of Representatives on Monday.

About two-thirds of Republican lawmakers refused to back the rescue package, as well as 95 Democrats in tense scenes rarely seen on the House floor.

The House is not due to meet again until Thursday as many members have gone home for a Jewish holiday.

Both US presidential candidates Barack Obama and John McCain back the rescue plan, although each has accused the other of injecting politics into horse-trading over the deal.

For the second time in as many days on Tuesday, Western European governments stepped in to prop up an ailing financial institution.

The French and Belgian governments rescued the Franco-Belgian financial services group, Dexia, with a package totalling more than $9bn (£5bn).

Its share price had fallen sharply following reports that it was seeking extra funds after governments bailed out its rival, Fortis.

As Dexia’s chairman and chief executive both quit, French President Nicolas Sarkozy met banking leaders, urging them to keep their credit lines open to businesses.

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September 30, 2008 - Posted by | Uncategorized

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