Overview: The US Senate voted yes to the revised bail-out plan in which the government among other things plans to buy 'toxic' assets from the banks for up to USD 700bn. The revised plan will now go back to the House of Representatives which rejected the original plan on Monday. The House is scheduled to vote on Friday. The revised plan includes new tax breaks and an increase in deposit-insurance limits. We expect the House to also vote yes to the plan and this will be important in order to relieve the banking system from the 'toxic' assets. These assets are a great hindrance for recapitalising the banking system as private investors are reluctant to invest in the banking system as long as the uncertainty over future losses from these assets prevails. The reaction in the markets has been moderate as weak US economic data is also weighing on Asian markets. The S&P500 future is down close to 1% from yesterday.
Flash Comment
USA: Senate votes yes to revised plan, House to vote again on Friday
Thu, Oct 2 2008, 08:53 GMT
by
Allan von Mehren
- Danske Bank A/S
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