29 September 2008 22:20 [Source: ICIS news]
WASHINGTON (ICIS news)--Top Bush administration advisors were to meet on Monday with leaders in Congress in hopes of drafting a new bailout plan to resolve what US business leaders are now calling a full financial panic.?xml:namespace>
Treasury Secretary Henry Paulson said he was consulting with President George Bush, Federal Reserve Chairman Ben Bernanke and congressional leaders on what the federal government’s top policy makers should do now.
A scramble for a new financial rescue plan began shortly after the House defeated the $700bn (€476) bailout proposal that had been worked out over the weekend among White House officials and leaders of both parties in Congress.
While congressional leaders voiced support for the massive mortgage rescue proposal, they failed to convince enough of the rank-and-file House members to support the package.
The measure was defeated by a vote of 228-205 with 133 Republicans and 95 Democrats combining to beat back the costly and controversial bailout plan.
Many members of Congress on both sides of the aisle complained that their constituents were 10-1 against what was perceived as a special-interest rescue for Wall Street bankers at the expense of ?xml:namespace>
In the aftermath of the defeat and record-setting declines in Wall Street stock indexes, House leaders vowed to try again to come up with a workable rescue plan that will meet congressional approval.
Paulson said that he “stands ready to work with fellow regulators and use all the tools at our disposal, as we have over the last several months, to protect our financial markets and our economy”.
That statement was seen as suggesting that the White House and the Treasury Department may take additional case-by-case bailout measures to rescue failing financial institutions until an overall rescue plan can be passed by Congress.
“Today’s failure to approve legislation addressing the financial crisis has resulted in uncertainty and turmoil that have dramatically affected the markets,” the chamber said.
The more than 750-point fall in the Dow Jones Industrial Average index following the rescue plan’s defeat was the largest one-day decline in the Dow's history.
The chamber warned Congress that failure to resolve the financial crisis is “eroding individual savings and destroying billions of dollars worth of household wealth”.
The business group urged Congress to immediately reconsider the bailout legislation, warning that the country is in a “financial panic”.
The National Association of Manufacturers (NAM), whose members include a number of chemical producers, also urged passage of the bipartisan bill.
“This legislation, while not perfect,” said the association, is needed “to avoid a massive financial crisis”.
($1 = €0.68)
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