3:13am UK, Monday September 29, 2008

US politicians have agreed the details of a $700bn (£380bn) financial rescue package, insisting it is not a bail-out of Wall Street but a way to protect American taxpayers.

House Speaker Nancy Pelosi with House Financial Services Committee Chairman Barney Frank

They have taken the unusual step of using the internet to publish the full text of the plan to rescue the country’s troubled financial sector – which runs to more than 100 pages.

:: Read the key points of the plan here.

By presenting the hastily-crafted bill online so quickly after it was agreed, Democratic leaders hope to project a sense of transparency.

Due to high demand, the websites of House Speaker Nancy Pelosi and the website of the House Financial Services Committee stalled due to overload within minutes of the text’s release.

Republican negotiator Judd Gregg said the plan would probably be voted on by the House of Representatives, the lower house of Congress on Monday.

The upper house, the Senate, could vote on it the same day or as late as Wednesday.

President George Bush and Treasury Secretary Henry Paulson have said the deal is vital if the US is to avoid “financial panic” and a “long and painful recession”.

Mr Bush said: ”This plan sends a strong signal to markets around the world that the United States is serious about restoring confidence and stability to our financial system.

“Without this rescue plan, the costs to the American economy could be disastrous

The announcement that key details had been agreed represents a breakthrough following days of talks between Republican and Democratic politicians.

The prospect of the government handing billions of dollars to Wall Street has caused fury in some quarters.

But Democratic House of Representatives Speaker Nancy Pelosi said the package would protect taxpayers, saying it included strong oversight and guarantees for use of public money.

She said: ”No longer will the American taxpayer bail out the recklessness of Wall Street.”

However, Mr Gregg predicted that the money laid out in a taxpayer-funded bail-out for the US financial system would be more than recovered.

He said: ”If we are successful in this effort, Secretary Paulson will settle out the credit markets with this very significant resource of bond money, of taxpayers’ money.

“We’ll be able to get into a more orderly system, and we’ll start as we sell this paper off to recover the tax dollars that we’ve laid out.

“We may lose some money, we may break even or we may make some money.

“My gut tells me we’re going to make money as taxpayers.”

According to a summary of the draft plan released by Ms Pelosi, the deal would release some $350bn initially and condition future payments on Congressional approval.

It would allow the government to buy up troubled assets from pension plans, local governments and small banks serving low-income families.

Four separate oversight agencies or processes, including a presence in the Treasury office, would be set up to conduct audits and prevent fraud and an independent inspector general to monitor the Treasury secretary’s actions.

House Republicans and Democrats announced they would be holding closed sessions to discuss the draft plan.

Both US presidential candidates offered qualified support for the bail-out proposal, an issue that threatens to overshadow their campaigns with less than six weeks until the election.

Republican John McCain said: ”This is something that all of us will swallow hard and go forward with. The option of doing nothing is simply not an acceptable option.”

Democrat Barack Obama said: ”My inclination is to support it. We have to remember how we got here. Not so much to allocate blame, but to understand the choices that will face the next president.”

Sky’s US political analyst Jon-Christopher Bua said: ”The Democrats and Republicans, including Barack Obama and John McCain, have to find a way to reach a bi-partisan agreement to avoid a total meltdown of the US economy.

“And since all the members of the House of Representatives are up for election along with a third of the Senate, it is critical that both sides share responsibility for this unpopular plan.

“Now it will be up to both parties to go back to their constituents and ‘sell’ the necessity of this legislation in order to limit the political damage.”