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World Markets Tumble Before US Bank Bailout Vote


World markets tumbled Monday before a vote by the U.S. Congress on a proposed $700 billion rescue plan for financial institutions. European markets and banks gave the massive bail-out package a lukewarm reception and analysts say there is a growing realization that the clean up will take time to work. For VOA, Tom Rivers in London has the European reaction.

While seen as helpful, the view in Europe is that the plan will not be enough to overcome the growing financial crisis that is impacting financial institutions worldwide.

In Frankfurt, Paris and London, the story is the same. Sharp falls are the norm and in some cases banks are crying out for their own rescues.

In Germany, mortgage lender Hypo Real Estate struck a last-minute deal with the government there to resolve a refinancing squeeze.

The European banking and insurance giant, Fortis was partly nationalized by the Netherlands, Belgium and Luxembourg over the weekend at a cost of just more than 16-billion dollars.

In Iceland, the government had to step in to buy a 75-percent stake in the Glitnir bank after its financing deteriorated during the past few days.

In Britain, the government has had to move in to save Bradford and Bingley, a mortgage lending institution with more than 300 branches nationwide.

The retail banking side has been sold off to the Spanish bank Santander with the British government nationalizing the firm's mortgage operation.

Prime Minister Gordon Brown says it is the latest example of dealing with stability problems as they arise.

"Ensuring the stability of the system means that we allowed Lloyds-TSB to take over Halifax-Bank of Scotland. We intervened to deal with share speculation in the market and we will continue to do whatever is necessary over these next few days in very difficult times, turbulent times around the world, to make sure that the British stability for which we have done a great deal over these last few years is maintained. And that is why the actions have been take in the way they have," he said.

British Treasury Secretary Alistair Darling says letting Bradford and Bingley go into bankruptcy was never an option. "I was determined to make sure we took decisive action both to protect savers and to protect taxpayers. I am doing both those things in what are extremely difficult conditions, not just here, but right across the world," he said.

But the government is not without its critics. Opposition Treasury Spokesman George Osborne says the problems Bradford and Bingley faced did not just show up last week. "For a year, the government knew there was a problem at Bradford and Bingley. For a year they could have put a solution in place. For a year they dithered and delayed and once again it is the taxpayer in the last resort who is left carrying the can," he said.

As the market turbulence continues one thing is certain, this latest wave of European bailouts will not be the last.

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