US banking bail-out unveiled

29 September 2008

Democrats and Republicans in the USA have agreed on a $700 billion deal which aims ‘to rescue America’s financial system and end the credit crunch’, as the BBC reports.

Page 1 of the ‘Discussion Draft’ of the Emergency Economic Stabilization Act states that the aim is ‘To provide authority for the Federal Government to purchase and insure certain types of troubled assets’.

The enormous scale of the deal means it could help the US overcome its financial problems, providing security for banks and making credit such as loans and mortgages more freely available.

However, it has also been extremely controversial, and Congress has insisted on adding a range of provisions designed to protect taxpayers.

Even so, the Act will still need to be passed by both houses of Congress.

If approved, it could restore confidence in financial markets and lead to the end of the credit crunch which has restricted access to loans, mortgages and other kinds of credit.

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