Bush signs $700b bailout deal to end 'threat to economy'

Washington: US President George W. Bush signed a $700 billion financial-market rescue plan into law, calling it a "decisive action to ease the credit crunch that is now threatening our economy."

However, the president also warned that it would take "time and determined effort to get through this difficult period".

The bipartisan legislation was sent on Friday to Bush after it was approved by the House, reversing its September 29 rejection of the measure, which had sent global stock markets plunging.

The bill, approved on October 1 by the Senate with $149 billion in tax breaks to attract House votes, authorises the government to buy troubled assets from financial institutions reeling from record home foreclosures. It also affirms regulators' power to suspend asset-valuing rules that companies blame for fueling the crisis.

"By coming together on this legislation we have acted boldly," Bush said at the White House shortly after the rescue package won final congressional approval.

The House approved the measure 263-171, four days after rejecting an earlier version by 228 to 205. The bill's defeat caused a 778-point drop in the Dow Jones Industrial Average, prompting dozens of lawmakers to switch their vote on the package, the government's largest step into the markets since Franklin Roosevelt's New Deal.

"The issue is stopping the panic," said Adam Posen, deputy director of the Peterson Institute for International Economics in Washington. "The plan's not perfect, but it's certainly better than doing nothing. Now Treasury has to be very aggressive about purchasing a wide range of assets very quickly."

Bush made more than a dozen phone calls to Republican lawmakers to lobby for the bill. The bill was backed by 172 Democrats and 91 Republicans. Over two-thirds of Democrats voted for the measure while fewer than half of Republicans supported it. On Sept. 29, the 140 Democrats voting for the plan were joined by 65 Republicans.