US politics: George W Bush last night urged America�s politicians to get back around the negotiating table and agree a bailout plan, warning that failure to do so would bring �painful and lasting� economic damage.
George W Bush last night urged America's politicians to get back around the negotiating table and agree a bailout plan, warning that failure to do so would bring "painful and lasting"
economic damage.
"Congress must act," declared the US President, pointing to Monday's dramatic drop of 777 points on the US stock market following the failure by the US Congress to agree to the $700m bailout plan.
His appeal seemed to have reassured the markets as investors' hopes rose that a new deal could indeed be struck later this week. The Dow Jones at one point rose nearly 300 points, or 2.8%.
With a deal of understatement, Mr Bush told reporters at the White House that he was "disappointed" by the rejection by the House of Representatives but insisted that "this is not the end of the legislative process".
He said: "The dramatic drop in the stock market that we saw will have a direct impact on retirement accounts, pension funds and personal savings of millions of our citizens."
Mr Bush noted the $700bn (£380bn) in the proposed bailout was huge but was dwarfed by the $1tr in lost wealth that resulted from Monday's stock market plunge.
He warned: "If our nation continues on this course, the economic damage will be painful and lasting.
"The reality is we are in an urgent situation and the consequences will grow worse each day if we do not act."
His appeal for action by the US Congress was firmly echoed by his would-be successors, Barack Obama and John McCain, who met the President yesterday.
Both proposed that US government insurance on deposits and savings should be increased from the present $100,000 to $250,000.
Mr Obama warned it would be "catastrophic" if a deal was not reached soon.
The Democratic candidate said: "Given the progress we have made, I believe we are unlikely to succeed if we start from scratch or reopen negotiations about the core elements of the agreement, but in order to pass this plan we must do more."
Mr McCain, a senator from Arizona whose own Republicans were largely responsible for sinking the bailout bill, acknowledged lawmakers had failed to convince voters that the deal was urgent.
He said he recommended to Mr Bush that the US Treasury's Exchange Stabilisation Fund of $250bn be used to shore up institutions and that the government exercise its ability to buy up $1tr in mortgages.
"Housing and mortgages are at the root of this crisis. I urge the Treasury to take action to shore up mortgage values," he went on.
Elsewhere, Steny Hoyer, Democrat leader in the House of Representatives, also urged his colleagues to act: "Doing nothing is not an option."
Mitch McConnell, Senate Republican leader, agreed, saying it was time for all his colleagues to "act like grown-ups, if you will, and get this done for all of the people".
US lawmakers are not due to reconvene until today - yesterday was the Jewish new year holiday - but congressional leaders and administration officials were seeking to assess what types of changes could win over enough votes to guarantee success.
On Monday, the House unexpectedly voted 228-205 against the bill, designed to stabilise a reeling financial system. This triggered the biggest one-day sell-off on Wall Street since the 2001 terror attacks as the Dow Jones industrial plummeted by 777 points.
The legislation the US administration had promoted would have allowed it to buy bad mortgages held by troubled financial institutions.
If successful, advocates of the plan believed it would have helped lift a major weight off the national economy.
However, Republicans in particular did not like the idea of Main Street bailing out Wall Steet.
