This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7639321.stm

The article has changed 7 times. There is an RSS feed of changes available.

Version 5 Version 6
US edges closer to bail-out deal US edges closer to bail-out deal
(about 6 hours later)
US Republican and Democratic Party lawmakers have said they are getting closer to agreeing a massive rescue plan to aid the financial markets. US Congressional leaders have said they hope to reach agreement on a massive rescue plan to aid the financial markets before they open on Monday.
Democrat senator Harry Reid told the upper house that "significant progress" had been made, but stressed there was still "a long way" to go. Senior members of the Democratic and Republican parties are trying to forge a compromise deal on buying bad assets that are freezing up financial markets.
He said about 15 issues had still to be resolved between the two sides. The Bush administration wants $700bn (£380bn) to help the finance sector.
Republican senator Mitch McConnell said the goal was to announce an agreement on Sunday and to have a vote on Monday. Democrats are seeking safeguards on how public money is spent. Some Republicans want to see private money used instead.
House and Senate leaders have been holding meetings, after negotiators from Congress, the White House and the Treasury worked through Friday night on details of a plan.
Democrat senator Harry Reid said "significant progress" had been made, but stressed there was still "a long way" to go.
Republican Senator Mitch McConnell said the goal was to announce an agreement on Sunday and to have a vote on Monday.
'Artificial timeline'
Negotiators want to have the outline of a deal to reassure the markets before they reopen on Monday.Negotiators want to have the outline of a deal to reassure the markets before they reopen on Monday.
During a rare Saturday session of the upper house, Mr Reid, the Senate majority leader, said congressional staff had worked on the legislation for the bail-out plan until the early hours of the morning. But House Republican leaders, who do not like some elements of the Bush administration's proposal, said they will not be rushed.
President George W Bush used his weekly radio address to try and reassure those Americans concerned about the burden on taxpayers of the deal, saying the package would end up costing less than the headline figure of $700bn.
The plan involves the government buying up toxic assets that banks have been unable to sell, clogging up the financial system.
Mr Bush told listeners the value of these assets would rise again.
"This means that the government will be able to recoup much, if not all, of the original expenditure," he said.
Compromises
Optimism about the chances of a deal grew after Democrats made a key concession on Friday.
We hope sometime [Sunday] evening we can announce there has been some kind of agreement in principle so that the only thing that will have to be done is the legislation Democrat Senator Harry Reid Rescue deal stalemateBail-out: the sticking pointsMore cash injected into banksWe hope sometime [Sunday] evening we can announce there has been some kind of agreement in principle so that the only thing that will have to be done is the legislation Democrat Senator Harry Reid Rescue deal stalemateBail-out: the sticking pointsMore cash injected into banks
Democratic House of Representatives Speaker Nancy Pelosi told a private meeting of Democrats that they would no longer be pursuing their proposal to amend the bankruptcy laws to allow judges to suspend repossession notices on foreclosed homes. "We're not moving on any kind of artificial timeline," said Republican Representative Roy Blunt.
"We're moving toward the very best solution in the shortest period of time we can get to the very best solution."
House Republicans object to using public funds to rescue private companies.
"We should not be bailing out Wall Street on the backs of American taxpayers," said Republican John Boehner, the House Minority Leader.
President George W Bush used his weekly radio address to try to reassure the many Americans worried about the burden on taxpayers of the deal, saying the package would end up costing less than the headline figure of $700bn.
He said the value of these assets would rise again, allowing the government to recoup much or all of its expenditures.
Election fears
Both sides have made compromises in order to move closer to agreement.
House Speaker Nancy Pelosi said Democrats would drop their proposal to amend bankruptcy laws to allow judges to suspend repossessions.
Republicans had feared that such a move would discourage banks from issuing new mortgages.Republicans had feared that such a move would discourage banks from issuing new mortgages.
And in a further a sign of movement, the House Republicans, who have expressed the strongest opposition to the emerging deal, dispatched their second-ranking leader, Roy Blunt, to join the talks. The Bush administration appeared to move to appease its Republican opponents by agreeing to include - but only as an option - their proposal to insure bad mortgage-backed assets rather than buying them outright from Wall Street firms, the centrepiece of the administration's proposal.
The Bush administration appeared to move to appease its Republican opponents by agreeing to include - but only as an option - their proposal to insure distressed mortgage bonds rather than buying them outright from Wall Street firms, the centrepiece of the government's proposal to unfreeze the financial markets. Correspondents say many voters do not like the idea of using their money to rescue the financial sector.
Blame game As well as the presidential vote, most members of Congress face re-election in November.
During a live TV debate on Friday, both Republican Senator John McCain and Democrat Senator Barack Obama endorsed the need for a compromise plan. Congress was supposed to recess on Friday, but has been forced into a rare weekend session over the need to agree on a financial rescue package.
But their responses also revealed differences over who was to blame for the crisis.
"We also have to recognise that this is a final verdict on eight years of failed economic policies promoted by George Bush, and supported by Senator McCain," Senator Obama said.
Senator McCain, meanwhile, blamed the crisis on irresponsible leadership in Washington and Wall Street, and said he would consider a freeze on non-military spending to pay the costs of the bail-out.
Voter worries
Congressmen of both parties are anxious to get back to their constituencies in order to fight the election which takes place on 4 November.
But they are also worried by growing evidence that most Americans are sceptical about the bail-out deal, and especially about how much it will cost
The latest opinion poll, from the Associated Press-Knowledge Networks, taken on Friday, showed that only 30% expressed support for the bail-out package, while 45% were opposed and 25% undecided, despite the dramatic appeals of President George W Bush and Treasury Secretary Henry Paulson that the move was necessary to save the US economy.
The widespread public opposition is one reason that the Congressional leadership wants a bi-partisan deal before they are prepared to put the proposals to a vote.
They do not want to face the voters unless they can show that Congress acted on a united front because of the urgency of the crisis.
Market wobblesMarket wobbles
Financial markets have been nervously watching the ebb and flow of the bail-out negotiations. The need for some kind of rescue plan was underscored on Thursday with the biggest bank failure in US history. Regulators seized Washington Mutual and sold its assets to JPMorgan Chase & Co.
On Friday, European markets fell, but rumours that negotiations had resumed boosted stocks on Wall Street, where the Dow Jones average of leading shares finished in positive territory. Investor worries have spread beyond the US too.
Meanwhile, central banks injected liquidity into the financial system to prevent inter-bank lending from seizing up, with the US Federal Reserve taking the lead by organising swaps with other central banks across the world, including Japan, the UK, Switzerland, and Australia. In London, troubled bank Bradford & Bingley is to be nationalised, the BBC has learned.
Meanwhile, central banks have injected funds into the financial system to prevent inter-bank lending from seizing up.
The US Federal Reserve took the lead by organising swaps with other central banks across the world, including Japan, the UK, Switzerland, and Australia.
Do you work in the banking or finance industry? Contribute to our Experts Forum here.Do you work in the banking or finance industry? Contribute to our Experts Forum here.