The US Senate has agreed to release the remaining 264 billion euros from the 530 billion euro financial bail-out aimed at stabilising the American economy.
The deal is being seen as a major victory for President-elect Barack Obama. Announcing the move Senator Chris Dodd said: “Mr President, this debate is not just any other debate. This is a debate that will give this new president the chance that all of us want him to have to get our country moving in the right direction.” To win approval, Obama and his team promised the funds would be used to help Americans hang on to their homes and pledged to tighten up accounting procedures. There has been widespread discontent that the first 264 billion euros requested by George W Bush did not combat foreclosures and was squandered by pumping money into distressed car manufacturers. The new funding will not be available to the motor industry except in special circumstances. The emergency funding will help the troubled Bank of America absorb the losses it incurred when it bought Merrill Lynch. The bank is to get a 16 billion euro cash injection and 89 billion euros worth of guarantees against toxic assets. In return for the money, the US Treasury will take a stake in the bank.