US Congress Agree $700b Bail Out

Both sides of the US Congress has agreed to a $700bn (£380bn) bail-out for the finance sector.

A main concern for Democrats and Republicans has been who will bear the brunt of the cost of the package. The government will use the cash offload bad debt from financial institutions. If they over value the debt, it could lead to tax payers bearing the brunt of the of bankers neligence. If they undervalue under value the debt it leaves the market in the financial crisis.

Those in favour of the deal have argued that:

• The deal would boost global financial stability
• Increase investor confidence
• Prevent a global slowdown
• Encourage banks to lend to each other, and beat the credit crunch

Those with reservations have said the bail-out would:

• Cost the taxpayer too much money
• Benefit bosses of firms who have taken huge risks
• Increase state debt
• Give too much power to the US Treasury

The Dow Jones index rose 3%, to 11,128.7 on the news. Congress could act in the next few days to pass a bill on the subject. With renewed funding, confidence and security in the market it could reverberate to other markets around the world.

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