KEY POINTS:
Finance Minister Michael Cullen has welcomed the United States Senate's approval of a massive US$700 billion ($1.06 trillion) rescue plan for the nation's finance system.
The New Zealand stockmarket also reacted positively to the news, jumping 1.41 per cent or 44.679 points.
Dr Cullen like many others around the world is now hoping that the House of Representatives, where lawmakers rejected the original version on Monday, 228-205, will back the bill tomorrow.
A strong bipartisan Senate majority rallied behind the controversial Wall Street bailout package, passing it by 74-25, but only after tacking on an extra US$110 billion in tax breaks to lure votes from both parties.
Dr Cullen said the vote was important to restore confidence in financial markets whose collapse could send the world into economic recession.
"It is a very positive move, particularly because there was a very large majority for it, basically three to one in favour, and reports so far seem to indicate that the changes to the bill will be sufficient to insure enough votes in the House of Representatives," Dr Cullen said.
"It is very important, it is a pity that it has already been delayed as that will weaken the effect a bit. But restoring the confidence in the financial sector is very important and of course the bill has a number of measures in it to try and ensure as far as possible that those responsible for this whole sad and sorry saga aren't able to profit."
Dr Cullen said the views of those in the US who believe Wall Street should be allowed to crash ignored the repercussions of a US and worldwide economic recession potentially flowing from a complete loss of confidence in the finance sector.
Earlier, after spectacular failure, the massive financial industry bailout found a second life today, winning lopsided passage in the Senate and gaining ground in the House of representatives, where Republican opposition softened.
In the House, leaders were working feverishly to convert enough opponents of the bill to push it through by Friday, just days after lawmakers there stunningly rejected an earlier version and sent markets plunging around the globe.
The measure did not cause the same uproar in the Senate, where both parties' presidential candidates, Republican John McCain and Democrat Barack Obama, made rare appearances to cast "yes" votes.
The rescue package lets the government spend billions of dollars to buy bad mortgage-related securities and other devalued assets held by troubled financial institutions. If successful, advocates say, that would allow frozen credit to begin flowing again and prevent a deep recession.
Even as the Senate voted, House leaders were hunting for the 12 votes they would need to turn around Monday's 228-205 defeat. They were especially targeting the 133 Republicans who voted "no."
Their opposition appeared to be easing after the Senate added $110 billion in tax breaks for businesses and the middle class, plus a provision to raise, from $100,000 to $250,000, the cap on federal deposit insurance.
They were also cheering a decision Tuesday by the Securities and Exchange Commission to ease rules that force companies to devalue assets on their balance sheets to reflect the price they can get on the market.
There were worries, though, that the tax breaks would cause some conservative-leaning Democrats who voted for the rescue Monday to abandon it because it would swell the federal deficit.
- AP/HERALD ONLINE/NZPA
