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Senate gives US $700bn bailout thumbs up – lower house vote tomorrow

The US Senate has finally accepted the Treasury’s $700bn toxic mortgage bailout with a vote due in the lower house, the House of Representatives tomorrow.

President Bush says he is confident the “essential” bill will pass.

The bailout has been stalled since friday after conservative Republican members of congress, led by Presidential candidate John McCain, felt unhappy with aspects of the deal. McCain has now backed the deal. More liberal Democratic senators were also unhappy with the bill.

The deal, which is the equivalent to $2,300 for every American, will see all ‘toxic’ mortgage assets bought by the US Government, then sold once markets return to a more stable, liquid footing.

McCain did not comment on the legislation, but Democrat Presidential candidate Barack Obama said: ““While that decline was devastating, the consequences of the credit crisis that caused it will be even worse if we do not act now.”

The main change to the bill was the addition of $150m of tax breaks for small businesses and individuals.

As well as the tax breaks the legislation included a temporary increase in the amount of bank deposits covered by the Federal Deposit Insurance Corporation, similar to the British FSCS, to $250,000 from $100,000.

US commentators have seen the wrangling as politick in the run-up to the elections in November.

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