Senate approves bailout package

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The U.S. Senate approved a $700 billion bailout. Photo: EFE

The U.S. Senate approved a $700 billion bailout of the financial industry, putting pressure on the House to approve a plan that political and financial leaders called crucial to averting economic catastrophe.

The revised legislation is aimed at reinvigorating worldwide credit markets and interbank lending that had frozen up while overleveraged financial institutions staggered under the weight of failed mortgages.

But market participants warned that the rescue package is not a cure-all, with a worsening economic outlook spurring calls for central banks to cut interest rates.

Stocks in Asia were lower on Thursday on recession fears, and European stocks were also forecast to open weaker. Treasuries rose and the dollar gave up early gains.

"Even if the bill is passed, worries remain over the global economic outlook so financial markets are unlikely to stabilize," said Masamichi Adachi, senior economist at JPMorgan in Tokyo.

"It's a completely different world now. All the things U.S. authorities are doing now are simply aimed at preventing a global meltdown."

Amid warnings that failure to act could plunge the country into a depression, the Senate voted 74 to 25 in favor, sending the measure to the House of Representatives, probably for a vote on Friday.

U.S. President George W. Bush praised Senate passage of the package and urged the House to quickly do the same.

"With the improvements the Senate has made, I believe members of both parties in the House can support this legislation," Bush said in a written statement. "The bill the Senate passed is essential to the financial security of every American," he said.