'Congress must act' to prevent long-term economic damage, Bush warns
U.S. President George W. Bush makes a statement about the economic bailout bill and financial crisis on Tuesday at the White House.(Charles Dharapak/Associated Press)
In a sombre televised statement on Tuesday, U.S. President George W. Bush urged Congress to act to prevent "painful and lasting" damage to the economy following the failure to pass a $700-billion rescue package for the country's ailing financial sector.
"Congress must act," Bush said in a statement from the White House before the North American markets opened.
The economy is at a critical moment and is depending on "decisive action on the part of our government," Bush said.
"We're in an urgent situation and the consequences will grow much worse with each day if we do not act. If our nation continues on this course, the economic damage will be painful and lasting."
Package rejected by vote of 228-205Bush said he was disappointed by the 228-205 vote on Monday afternoon that rejected the bailout package.
Proponents of the deal will now be trying to determine what kind of compromises are needed to bring the opponents on board the plan, said CBC reporter Alison Smith.
Part of the challenge is that the United States is just weeks away from its Nov. 4 election and some congressional representatives are finding it difficult to approve legislation that Americans seem to overwhelmingly oppose, Smith said.
"They've been unable to persuade Americans that this is something more than just a bailout package for corporate fat cats," she said.
The president said he wanted to assure Americans and "citizens around the world" that the rejected bill is not the end of the legislative process.
Many global stock markets continued to fluctuate on Tuesday morning as investors reacted.
The bailout would have seen the U.S. government immediately buy as much as $350 billion in distressed debt held by Wall Street banks and investment houses, with a further $350 billion available later. Much of the bad debt is linked to the collapse of the subprime mortgage market.
Plan too much for firms, too little for Americans?The government could have held on to the debts for several years, possibly until credit markets settled and house prices recovered, and it could then sell the debt at a profit.
Critics of the bailout plan said it would have done too much for Wall Street firms and moguls, and too little for the average American. Alternative plans discussed by pundits included having the government provide mortgage relief directly to homeowners, as well as loan guarantees for people at risk of losing their houses to stave off or even reverse a foreclosure.
The ultimate cost of the bailout will likely be much less than the $700 billion authorized by the legislation, Bush repeated Tuesday.
"The sooner we address the problem, the sooner we can get back on the path of growth and job creation," Bush said. "That is what elected leaders owe the American people and I'm confident we'll deliver."
The House is not scheduled to meet again until Thursday.
Obama, McCain echo need to actPresidential contenders Barack Obama and John McCain also urged Congress to continue working on the legislation after Bush's statement.
Campaigning in Nevada, Obama warned of dire consequences if action isn't taken immediately to solve the crisis.
"Thousands of businesses could close around the country. Millions of jobs could be lost. A long and painful recession could follow," he said.
"Your prospects for finding a job, your prospects for being able to buy a home, your prospects for being able to raise a family, all that's going to be affected," he told a crowd.
Obama called on politicians to put partisanship aside and stop worrying about the election.
"All of us now have a responsibility to solve this crisis, because it affects the financial well-being of every single American," he said. "There will be time to punish those who set this fire, but now is the moment for us to come together and put the fire out."
Republican candidate McCain, in an interview with CNN, said, "Americans are frightened right now."
It is the job of political leaders to come up with an immediate solution and a long-term approach to the economic crisis, McCain said.
U.S. must show 'statesmanship'World leaders on Tuesday were also urging the United States to act .
The rejection of the bailout plan has had major impacts on the world economy, said Japan's economy minister, Kaoru Yosano.
French President Nicolas Sarkozy, who holds the European Union presidency, said Europe's four main economic powers were to meet in Paris in the coming days to prepare for a larger summit to deal with the meltdown.
The European Commission urged the United States to show "statesmanship" in the financial crisis.
The EU is disappointed the House of Representatives rejected the rescue package, said commission spokesman Johannes Laitenberger.
"The turmoil that we are facing has originated in the United States. It has become a global problem," Laitenberger said.
German Chancellor Angela Merkel said the quick passage of a rescue package is "the precondition for creating new confidence on the markets — and that is of incredibly great significance."
With files from the Associated Press
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