House set for fresh bail-out vote

The US House of Representatives is preparing to vote on a $700bn (£380bn) plan to rescue the US financial sector.

• Party leaders are hoping the House, which stunned global markets by rejecting the initial plan, will follow the Senate and back a new version.
• The House began debating the deal on Friday morning and is expected to vote later in the day.
• The Senate bill added about $100bn in new tax breaks in the hope of gaining more support from House Republicans.
• Share prices in Japan fell to a three-year low on Friday ahead of the vote. The Nikkei index closed down more than 1.9%, its lowest level since May 2005.
• In Europe, shares were relatively flat. In early afternoon trading the UK’s FTSE 100 was down just 18 points, France’s Cac 40 was down nine and Germany’s Dax up seven.
• That followed a sharp fall in US shares on Thursday as investors showed caution over prospects for the vote. On Wall Street, the Dow Jones index closed down 3.2%.
• The financial volatility continued on Friday as US bank Wells Fargo announced it would buy troubled rival Wachovia in a $15.1bn (£8.5bn) deal.
• The US also reported its biggest monthly job loss in more than five years.
• Bush plea
• In Washington, House Speaker Nancy Pelosi, a Democrat, has said no vote will be scheduled until the party feels it will pass.
• “We’re not going to take a bill to the floor that doesn’t have the votes. I’m optimistic that we will take a bill to the floor,” she said.
• When the House first rejected the plan on Monday – by 228 votes to 205 – legislators had concerns about both the content of the plan and the speed with which they were being asked to pass it.
• President George W Bush has since urged the House to back his revised bill.
• The package is aimed at buying up the bad debts of failing institutions on Wall Street.
• Both the Democratic and Republican parties are pressing their members in the House to swing behind the revised bill and party leaders expect it to pass.
• But the BBC’s Justin Webb, in Washington, says some members have called for more amendments, which opens up the prospect of further horse-trading up to the point at which votes are cast.
• Pressure will particularly be applied to the 133 House Republicans who went against party affiliation to reject President Bush’s bill, correspondents say.
• Tennessee Republican Zach Wamp, one of those who voted against the bill on Monday, said he would now vote in favour of the measure despite ordinary Americans remaining “as mad as heck” at the situation on Wall Street.
• “You have got to do what you think is right. I thought the right thing Monday was to vote no. And I think the right thing to do tomorrow is to vote yes.”
• The bill successfully passed through the Senate on Wednesday after it was amended to raise the government’s guarantee on savings from $100,000 to $250,000.
• It also now includes tax breaks to help small businesses, expand the child tax credit and extend help to victims of recent hurricanes.
• Most importantly, it extends the tax break aimed at boosting the provision of alternative energy such as wind farms.
• It also includes a number of so-called “pork-barrel” measures including tax cuts for rum manufacturers in Puerto Rico and the owners of racetracks.
• The additional cost of these unrelated tax breaks – which could add $100bn to the bill – have worried some fiscally conservative Democrats in the House of Representatives.