US Senate passes bill addressing mortgage debt

3 October 2008

A revised ‘financial bail-out’, passed by the US Senate, still has to be approved by the House of Representatives, which rejected a similar bill on Monday.

The revised bill still focuses on a proposed ‘bail-out’ of financial institutions – allowing the US government to spend approximately $700 billion buying up ‘toxic’ mortgage debts and other ‘troubled assets’.

The aim is to free up banks to lend more and restore confidence in financial markets, potentially ending (or at least alleviating) the credit crunch.

But the bill is deeply unpopular among American voters, which may lead many in the House of Representatives to reject the new version, as they did the initial bill.

Politicians, however, are warning that failure to pass the bill could have a severe negative impact on people all over the world – not just US citizens, and not just people currently looking for mortgages and other loans.

In the words of Democratic presidential candidate Barack Obama, as reported on CNN’s website: “we can’t afford to take a risk that the economy of the United States of America and, as a consequence, the worldwide economy could be plunged into a very, very deep hole.”

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