Bail-out plan goes to vote; BANKS PROSPER AS RESCUE BID RETURNS

Evening Chronicle (Newcastle, England), Oct 1, 2008

THE US Senate will tonight voting on an pounds 385 billion rescue package for the nation's economy in a surprise bid to get the rejected plan passed.

The plan to put the package in front of the Senate was announced today by Senator Harry Reid, leader of the Democratic majority, who sets the Senate agenda, and Republican leader Mitch McConnell.

But the proposal to go in front of the US upper house includes a tax-cut plan already rejected by the House of Representatives.

It would also raise government deposit insurance limits to 250,000 dollars, (pounds 139,000), from 100,000 dollars, (pounds 55,600), per account.

Meanwhile today the UK's biggest banks gathered stock market momentum following the salvage plan.

Expectations of Congressional approval for a deal saw Halifax Bank of Scotland, Barclays, Royal Bank of Scotland and Lloyds TSB all gain ground early on as the FTSE 100

Index lifted 1.5%. And HBOS was 4% higher after a 14% fall yesterday.

The US vote comes after President Bush was forced into making his fourth address to the nation in a week. He warned that quick decisive action was needed to avoid painful and lasting damage after the 700 billion dollar economic rescue package lay in tatters following its rejection by the US Congress on Monday.

Meanwhile Gordon Brown has rejected calls to give savers a cast iron guarantee that all their savings are safe.

He repeated his pledge to do whatever was necessary to get Britain through the financial turmoil after Chancellor Alistair Darling held talks with opposition parties.

But, in the face of demands from Liberal Democrat leader Nick Clegg for a cast iron guarantee that no depositors would lose out, Mr Brown said he believed Government plans to extend the present protection level to pounds 50,000 would be sufficient.

He said: "We will do whatever is necessary, however it is necessary, to ensure the stability of the system, which is vital to the security of family budgets and the security of pensioners with savings.

"Of course we look at every intervention that is necessary to take but I think people can see from our actions that depositors have been protected. No UK depositor has lost money."

The raising of the limit from pounds 35,000 to pounds 50,000 is included in new banking legislation.

All-party talks resulted in agreement to get legislation to allow the Bank of England to rescue failing banks onto the statute books speedily.

CAPTION(S):

STILL CONFIDENT: President Bush and Gordon Brown