World markets were mixed Wednesday amid efforts to revive a $700 billion US bailout package aimed at rescuing troubled American financial institutions and reversing tight credit that could strangle global economic growth. VOA's Michael Bowman reports from Washington, where the U.S. Senate is expected to vote on the latest version of the bailout bill.
Despite days of intensive negotiations between congressional leaders and the Bush administration, the previous version of the bill was defeated Monday in the House of Representatives. The U.S. stock market responded with its biggest-ever one-day point loss.
Democratic Senator John Kerry says there must be no repeat of Monday's fiasco.
"We must get this financial package done, and I believe we will get it done," he said.
Now the Senate will have its say. Senate negotiators took the framework of the House bill and added several provisions designed to broaden the measure's appeal, including tax breaks for some businesses and raising the limit of federally-insured bank accounts from $100,000 to $250,000 per person.
"We have come together here on a bipartisan basis, and structured a way forward on an important rescue package for our country," Senate Minority Leader Mitch McConnell said.
Presidential candidates John McCain and Barack Obama - both senators - are expected to return to Washington from the campaign trail to vote on the measure, as is Mr. Obama's running mate, Senator Joe Biden.
For now, Wall Street seems to be taking a wait-and-see approach after several days of wild swings both negative and positive. U.S. stocks opened moderately lower Wednesday. Asian and European shares were mostly higher.
The financial crisis began with a rash of US home foreclosures after a prolonged period of loose credit that saw millions of Americans acquire home mortgages they could not afford. The fallout prompted the failure of many of America's best-known financial institutions, and reluctance by lenders to extend credit. It has also led some Americans to question the safety of bank accounts, despite the fact that nearly all are federally guaranteed.
Raising federal guarantee limits for bank accounts will ease concerns, according to Andrew Gray, a spokesman for the Federal Deposit Insurance Corporation.
"This would provide the dual benefits of providing additional liquidity for banks for lending, as well as provide some additional reassurance for depositors above the current [insurance] limits," Gray said.
But not all economists support the bailout package, which calls for the federal government to relieve struggling financial institutions of up to $700 billion in bad debt.
"This quasi-monetary policy involves the Treasury purchasing poor paper, securities that have turned sour, securities that no one else wants. That is not the way normal monetary policy works," noted University of Chicago economist Lawrence Officer. "Normal monetary policy works by having the central bank buy up good securities, not crummy paper."
Even if the bailout package is ultimately approved and implemented, most economists believe the United States will endure a prolonged period of slow growth, if not a painful recession.
In the face of a grim outlook, Congresswoman Marcy Kaptur is urging stoicism.
"We have a strong economic system, and frankly for Wall Street I would say, 'calm down, do not panic, do not be led to anxious behavior,'" she said.
Should the Senate pass the rescue package, the measure would be taken up by the House as early as Thursday.