Senate passes $700 billion Wall Street deal

One house of the US Congress has now approved the Treasury’s deal, but it could still fail

WASHINGTON, DC – The US Senate has passed a revised version of the Treasury’s $700 billion (£380 billion) bail-out plan. Both political parties in the upper house of Congress strongly supported the deal in a vote last night that President George W Bush said was “essential to the financial security of every American”.

To placate opponents of the plan, the redrawn proposal now includes $110 billion in tax breaks – with an emphasis on small businesses, and an increase in depositor protection from $100,000 to $250,000.

Senate leaders and both presidential candidates (who suspended electioneering for the vote) conspicuously avoided describing Treasury secretary Henry Paulson’s plan as a bail-out for Wall Street banks.

Whether the bill will pass through the House of Representatives after its narrow rejection on Monday depends on Republican whips’ ability to coerce rebels into backing the bill, which is widely seen as un-American and impolitic due to its unpopularity with anti-Wall Street blue-collar workers whose houses are in danger of repossession.

The bill is also unpopular among Democrats. Despite their having voted largely in favour of the bill at its last reading, it is uncertain how many more will be swayed by this revised offering. Many voted out similar tax cuts earlier this year, citing government failure to balance its books.

The House of Representatives will vote again on Friday.