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President George W. Bush has signed an economic rescue package that passed the House of Representatives this morning.
The package — being called a "rescue" plan after the earlier "bail-out" failed — offers tax incentives for businesses and gives families tax relief, and will eventually restore economic prosperity, Bush said a few minutes after the House vote.
He doesn't usually believe in government intervention in the markets, Bush said, "but this action is necessary."
Banking assets the government has aquired in recent days will go up in value as markets recover, Bush said in a televised conference before signing the package in Washington, D.C.
The plan also offers tax breaks and raises the limit on federal deposit insurance from $100,000 to $250,000.
After their vote to approve the package 263-171, House Democrats said the package and the bipartisan vote in both chambers of Congress in the past 24 hours would restore stability to financial and credit markets.
“I’m hopeful we’ve restored credibility and confidence in our body politic. We can come together in a very strong, bipartisan way,” added House Majority Whip James Clyburn.
But markets responded with limited enthusiasm, falling as much as 350 points before the vote and rising as much as 300 points as the count shaped up for a victory for the package.
Markets still are facing the possibility of a prolonged economic downturn.
There’s a feeling that this plan “isn’t a quick fix,” said Ryan Larson, senior equity trader at Voyageur Asset Management, a subsidiary of RBC Dain Rauscher.
“There are still a lot of problems out there,” Larson said.
Traders also were spooked by new data showing the number of people claiming jobless benefit is at a seven-year high and a sharp fall in factory orders.
Thursday night, the U.S. Senate voted 74-25 in favor of the amended $700 billion rescue plan that will buy banks' toxic assets to help restore confidence to the domestic and global financial markets and stave off a recession.
Investors had been anxious for resolution on the government’s plan to buy up bad assets from banks and other institutions to shore up the financial industry and help resuscitate credit markets.
Trading across markets has been volatile throughout the week based on investors’ reading of whether the plan would win approval; on Monday, the House’s rejection took Wall Street and Capitol Hill by surprise.
Investors are now contending with worries about the broader economy, not just the credit markets, and the knowledge that the plan’s passage won’t help the economy much in the near term. On Thursday, the Dow industrials, which have seen triple-digit moves each day this week, fell 348 points on a growing belief that the plan won’t stop the U.S. from falling into a prolonged recession.
The credit markets indicated increased demand for safety. The yield on the 3-month Treasury bill, the safest type of investment, fell to 0.51 percent from 0.70 percent late Thursday. Yields have remained low in recent weeks because investors are eager to safeguard their money.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.71 percent from 3.64 percent late Thursday.
After months of market and financial turbulence as the United States home mortgage market slowly collapsed, the House of Representatives — under pressure from voters who see the rescue plan as a sop to rich and irresponsible bankers and lenders — rejected the package on Monday 228-205.
The Dow Jones Industrial Average plummeted more than 777 points on Monday as the House turned down the $700 billion package, promping at least seven English and European banks to collapse and raising world-wide fears of a recession.
Meanwhile, credit continues to grow tighter for even viable businesses, whose owners report they are struggling to find short-term loans to make payroll and buy inventory.
ooo
The Times Online contributed to this report.
The package — being called a "rescue" plan after the earlier "bail-out" failed — offers tax incentives for businesses and gives families tax relief, and will eventually restore economic prosperity, Bush said a few minutes after the House vote.
He doesn't usually believe in government intervention in the markets, Bush said, "but this action is necessary."
Banking assets the government has aquired in recent days will go up in value as markets recover, Bush said in a televised conference before signing the package in Washington, D.C.
The plan also offers tax breaks and raises the limit on federal deposit insurance from $100,000 to $250,000.
After their vote to approve the package 263-171, House Democrats said the package and the bipartisan vote in both chambers of Congress in the past 24 hours would restore stability to financial and credit markets.
“I’m hopeful we’ve restored credibility and confidence in our body politic. We can come together in a very strong, bipartisan way,” added House Majority Whip James Clyburn.
But markets responded with limited enthusiasm, falling as much as 350 points before the vote and rising as much as 300 points as the count shaped up for a victory for the package.
Markets still are facing the possibility of a prolonged economic downturn.
There’s a feeling that this plan “isn’t a quick fix,” said Ryan Larson, senior equity trader at Voyageur Asset Management, a subsidiary of RBC Dain Rauscher.
“There are still a lot of problems out there,” Larson said.
Traders also were spooked by new data showing the number of people claiming jobless benefit is at a seven-year high and a sharp fall in factory orders.
Thursday night, the U.S. Senate voted 74-25 in favor of the amended $700 billion rescue plan that will buy banks' toxic assets to help restore confidence to the domestic and global financial markets and stave off a recession.
Investors had been anxious for resolution on the government’s plan to buy up bad assets from banks and other institutions to shore up the financial industry and help resuscitate credit markets.
Trading across markets has been volatile throughout the week based on investors’ reading of whether the plan would win approval; on Monday, the House’s rejection took Wall Street and Capitol Hill by surprise.
Investors are now contending with worries about the broader economy, not just the credit markets, and the knowledge that the plan’s passage won’t help the economy much in the near term. On Thursday, the Dow industrials, which have seen triple-digit moves each day this week, fell 348 points on a growing belief that the plan won’t stop the U.S. from falling into a prolonged recession.
The credit markets indicated increased demand for safety. The yield on the 3-month Treasury bill, the safest type of investment, fell to 0.51 percent from 0.70 percent late Thursday. Yields have remained low in recent weeks because investors are eager to safeguard their money.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.71 percent from 3.64 percent late Thursday.
After months of market and financial turbulence as the United States home mortgage market slowly collapsed, the House of Representatives — under pressure from voters who see the rescue plan as a sop to rich and irresponsible bankers and lenders — rejected the package on Monday 228-205.
The Dow Jones Industrial Average plummeted more than 777 points on Monday as the House turned down the $700 billion package, promping at least seven English and European banks to collapse and raising world-wide fears of a recession.
Meanwhile, credit continues to grow tighter for even viable businesses, whose owners report they are struggling to find short-term loans to make payroll and buy inventory.
ooo
The Times Online contributed to this report.
