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Bush reassures over $700bn bailout

President Bush has reassured markets that legislators will pass the $700bn rescue plan to cleanse the markets of bad mortgages.

Bush is expected to resume talks with Congressional Leaders later today in a bid to thrash out a deal.

Bush urged Congress yesterday to pass the emergency plan, but the Democratic-held congress has found fault in the plan, which will see $700bn of US taxpayers money pumped into ailing money markets.

Bush and Treasury secretary Hank Paulson were confident the plan would pass through Congress after both Presidential Candidates John McCain and Barak Obama agreed to bi-partisan discussion. Now senators are predicting the scheme’s fate will not be decided until after the weekend.

McCain is said to be at the centre of the indecision, deciding to side with Republican Congress members, who want to create an alternative plan based upon the Government offering insurance coverage on up to half of all the mortgage-backed assets in the market.

U.S. Senate banking committee chairman Christopher Dodd told CNN: “What this looked like to me was a rescue plan for John McCain for two hours. To be distracted for two to three hours for political theater doesn’t help.”

Obama also told CNN:”The concern that I have is that when you start injecting presidential politics into delicate negotiations then you can actually create more problems rather than less.”

This news came as the Federal Government closed down the US’ biggest mortgage lender, Washington Mutual. JP Morgan bought the deposits of the struggling mortgage lender for $1.9bn.

At 3.40pm, the FTSE 100 was down 86 points to 5110, a 1.67 per cent drop.

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