$700 billion bailout approved

EC welcomes; Medvedev asks for a "more just" global financial system

With the economy on the brink and elections looming, Congress approved an unprecedented $700 billion government bailout of the battered financial industry and sent it to President Bush for his certain signature.

The final vote, 263-171 in the House, was a comfortable margin with 58 more votes than it garnered. The vote capped two weeks of tumult in Congress and on Wall Street, punctuated by daily warnings that the country confronted the gravest economic crisis since the Great Depression if lawmakers failed to act.

Bush was poised to make a statement on the historic vote.

U.S. President George W. Bush has signed the plan aimed at easing the financial sector's credit crisis.

"We have acted boldly to help prevent the crisis on Wall Street from becoming a crisis in communities across our country," Bush said after the vote.

He warned that the U.S. economy, however, "continues to face serious challenges."

Treasury Secretary Henry Paulson stressed that time was critical to get the proposal passed and that changes to the administration's measure, which was sent to lawmakers, could delay that approval, further unsettling global financial markets, which have already seen a number of stomach-churning days as the result of the biggest upheaval on Wall Street since the Great Depression.

Paulson insisted that the administration had no choice.

The cost of doing nothing would have been far more severe because the clogged credit markets would make it harder for businesses to get the loans they need to keep operating, he said. Doing nothing also would make it harder for consumers to get the credit they need for car loans and other purchases, the Treasury secretary said. Consumer spending accounts for two-thirds of total economic activity.

"We need to look at what is going on in the credit markets and they are still very fragile right now and frozen," Paulson said

The European Commission welcomed the passage of the $700 billion financial industry bailout bill in the U.S. Congress, saying it hoped the move would help restore market confidence.

"We welcome the vote and we hope it will help restore confidence in financial markets," Commission spokeswoman Amelia Torres said.

4th Congressional Representative Peter DeFazio heavily criticized the $700 billion bailout of the nation's financial industry.

DeFazio said, "This is a sad day for America. I believe this is one of the greatest financial mistakes in the history of this country," DeFazio believes that the bill leaves the U.S. taxpayers on the hook for $700 billion to bailout Wall Street speculators, but "does nothing to address the sagging underpinnings of our economy like the increasing unemployment rate, the housing and foreclosure crisis, or the huge backlog of investment in critical infrastructure."

DeFazio voted no on the bill which passed in the House of Representatives 263-171. President Bush quickly signed the bill into law from the White House.

Russian President Dmitry Medvedev said the era of US financial dominance was over, and he won the backing of Germany's visiting chancellor in calling for a "more just" system.

Both Medvedev and German leader Angela Merkel called for new measures to respond to a credit crunch that has raised fears of a deep worldwide recession since it spread from the United States into international markets. "The time of domination by one economy and one currency has been consigned to the past once and for all," Medvedev said during a forum alongside Chancellor Merkel.

"We must work together towards building a new and more just financial-economic system in the world based on the principles of multi-polarity, supremacy of the law and taking account of mutual interests."

Medvedev said the crisis showed the United States was not powerful enough to control world markets alone.

"The events of recent times confirmed that a single country, even powerful, is unable to be a kind of mega-regulator," he stressed.

His comments came a day after Russia's powerful Prime Minister Vladimir Putin lashed out at US economic "irresponsibility" for the global financial crisis.

Russia's fledgling stock markets, rarely predictable in normal times, have swung wildly in recent weeks as the scope of the US-rooted crisis has become clear, forcing regulators to repeatedly suspend trading.

The White House rebuffed Russian President Vladimir Putin's charge that US "irresponsibility" caused the global financial crisis and warned against "unfair" finger-pointing.

Asked about Putin's allegation that US authorities were responding weakly to the meltdown, spokesman Tony Fratto replied: "We have dealt with this problem, a very complicated and far-reaching problem, in as aggressive a way possible. And I don't think there's any question of that."

Fratto shrugged off mounting global criticism of US economic management, saying US financial markets had "contributed greatly not just to American growth, but to global growth over the past 15 years."

"And to stand here and just dump on what that industry has done because of this crisis is, I think, a bit unfair," he said, adding that investors had relied on "their own judgment" in putting money into the US system.

"We're going to trust their judgment. And I think everyone has gotten a bit wiser about the due diligence that you need to do to be able to make those investments in the future," said the spokesman.

Asked whether the White House would encourage investments in the United States, Fratto replied: "Investors should make their own decisions."

In a bid to help shelter Russia from the crisis, Putin has called on his ministers to strengthen the money markets - a key source of short-term funds for the banks - and mobilize national resources.