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Wall Street shares surged over hopes of an agreement on a 479 billion euro rescue package for the stricken financial sector.

Big bank shares staged a late rally in the belief the US Congress would “rise to the occasion” as President Bush put it and pass the bail-out plan.

Speaking at a packed Washington press conference the House of Representatives Financial Services Committe Chairman Barney Frank(Democrat) was upbeat.

“If this were presented in a partizan way, if one of the political parties in either houses looked like they were saying no, if one of the presidential candidates appeared to be kind of trying to undercut it, not only does it become hard to pass, it makes it hard to work.”

But a significant number of lawmakers say they are against such heavy Federal intervention. They would insure the financial companies’ bad debts rather than buy them.

The doubters were mindful of the failure of Washington Mutual on Thursday before it was sold on to JP Morgan Chase.

David Wyss, Chief Economist at Standard and Poor’s said: “Nobody is willing to loan to anybody else, and until we get a deal in place it’s hard to see how they are going to right themselves.”

One positive note was that the sale of Washington Mutual prevented The Federal Deposit Insurance group from depleting its own funds.