Bush unveils $250 billion rescue plan
George Bush has unveiled the details of the $250 billion banking bailout, which will see the US government take stakes in some of the biggest banks on Wall Street.
The US president described the move as "aggressive", adding that he supported measures outlined in other countries in Europe.
The first part of the plan will see the government inject a "portion" of its $700 billion rescue fund into "healthy and struggling banks" through the purchase of shares to allow them to resume lending to businesses and consumers. When the markets return to normal, banks will be able to buy back the government-owned shares, Bush added.
On Monday, a host of European countries - including the UK - pledged their commitment to helping ailing banks and outlined their own rescue schemes.
Earlier this month, the US authorities approved a $700 billion resuce package, which will be used to make the cash injection.
The news has, as yet, had little impact on American stockmarkets; the Dow Jones rose 0.61% in light of the news, while the Standard & Porr's gained 0.43%. The Nasdaq, however, fell nearly 2% following the announcement.
The FTSE 100 jumped 8% yesterday following the government injecting £37 billion into RBS, HBOS and Lloyds TSB, and rose another 188-odd points in the first hour of trading today.
Elsewhere, Japan's Nikkei gained a record 14% while the Dow Jones in the US was up 11%. In France, the Cac 40 was up 4.04%.
A market-weighted index of the 100 biggest companies by market capitalisation listed on the London Stock Exchange. It is often referred to as “The Footsie”. The index began on 3 January 1984 with a base level of 1000; the highest value reached to date is 6950.6, on 30 December 1999. The index is “weighted” by how the movements of each of the 100 constituents affect the index, so larger companies make more of a difference to the index than smaller ones. To ensure it is a true and accurate representation of the most highly capitalised companies in the UK, just like football’s Premier League, every three months the FTSE 100 “relegates” the bottom three companies in the 100 whose market capitalisation has fallen and “promotes” to the index the three companies whose market capitalisation has grown sufficiently to warrant inclusion. Around 80% of the companies listed on the London Stock Exchange are included in the FTSE 100.