World awaits action after US rejects bailout

WASHINGTON, September 30, 2008 (AFP) – Treasury Secretary Henry Paulson warned US lawmakers they had to act fast after the House rejected his 700-billion-dollar bank bailout, triggering panic selling as the global financial crisis deepened.

Stock markets around the world plunged after US House members, wary an angry public will punish them on Election Day five weeks from now, voted 228 to 205 Monday to shoot down what would be the biggest government bailout in history.

US stocks lost one trillion dollars in value in one day for the first time ever. Markets across Asia and Europe also fell steeply, as the House defied warnings that the entire world was waiting for the United States to act.

“Markets around the world are under stress,” said Paulson, the architect of the audacious proposal to buy up the mountains of bad mortgage-related debt behind a wave of home foreclosures and spectacular bank failures.

“We need to get something done,” Paulson said. “This is much too important to simply let fail.”

Despite fears the stability of the global financial system is at stake, House lawmakers appeared to heed widespread public sentiment that the US taxpayer should not suffer for Wall Street’s mistakes. But Australian Prime Min