US Congress under pressure to act on ‘toxic debt’

2 October 2008

The pressure on the US Congress has been raised even further by a warning from the International Monetary Fund (IMF), the Guardian reports.

It followed the recent rejection of the Emergency Economic Stabilization Act, which would have allowed the US government to spend around $700 billion buying mortgage debts and other ‘troubled assets’ from lenders.

IMF managing director Dominique Strauss-Kahn stressed the need for the US to take urgent action to protect its economy.

“We’re right at the moment where action is needed,” he stated in an interview with Reuters, adding that “A non-perfect plan is better than no plan at all.”

The Senate is due to vote on a revised rescue package on Wednesday night. If it passes, the package is expected to restore confidence in the financial systems and to avoid a potential financial disaster caused by high levels of ‘toxic debt’.

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