However, the first draft of the blueprint was rejected by the House of Representatives on Monday further deepening the global financial crisis. Since, a revised version of the rescue plan, with tax breaks for families and small businesses and an increase in the threshold for guaranteed deposits, has been approved by the Senate. Now it is to move to the other side of the Capitol to gain the approval of the House of Representatives.
When introducing the first version of the rescue plan, Nancy Pelosi, the Democratic speaker of the House of Representatives, warned Wall Street that “the party is over”. After the rejection of the first version of the rescue plan Pelosi was blamed by the Republicans for the failure to pass the blueprint. Pelosi pronounced in her speech that the recklessness of the Bush administration’s economic policies were to blame for the crisis. She said that the Democrats believed in a free market, however, with no regulation, discipline and with an anything-goes mentality the market had been left to its own devices and had been due to fail.
Whilst the initial version of the $700bn bail-out of Wall Street was being drafted during the last weekend, the UK government was busy constructing a rescue plan for Bradford & Bingley, a building society with a focus on the buy-to-let property market. On Monday the partial nationalisation of Bradford & Bingley was announced with the government taking control of the bank’s £50bn mortgages and selling off its £20bn savings unit to Abbey and its Spanish parent company Santander.
The same weekend there were other buy-outs and bail-outs on both sides of the Atlantic. Wachovia, the fourth largest US bank, was bought out by Citigroup. Fortis, a Benelux bank, was partly nationalised due to great losses it had suffered as a result of its earlier take-over of ABN-Amro Bank. Dexia, a Franco-Belgian bank, received a cash injection of £5bn from the Belgian, Luxembourg and French governments to avoid going bust.
The breadth and depth of the financial turmoil is reflected by the losses in banks’ share values on the world’s stock-exchanges and the record falls of stock-exchange indices. With the $700bn rescue plan still uncertain, world leaders are eager to restore confidence in the markets by finding other ways of clearing up toxic debt instruments the underlying causes of the current financial crisis.
Vocabulary:
- financial rescue plan – pénzügyi mentőcsomag
- collapse – összeomlás
- blueprint – törvényjavaslat
- rejection – elutasítás, elvetés
- recklessness – gondatlanság
- to leave sy/sg to its own devices – a sorsára hagyni vmit/vkit
- to be due to fail – kudarcra van kárhoztatva/ítélve
- to draft sg – tervezetet készít/ír
- buy-to-let property market – kiadás céljára vásárolt ingatlanok piaca
- nationalistion – államosítás
- to go bust – csődbe megy
- breadth and depth of sg – valami mérete (szó szerint: vmi terjedelme és mélysége)
- share value – részvényérték
- to restore confidence – a bizalmat helyre állítani
