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The measure, aimed at combating the worst economic crisis since the Great Depression of the 1930s, marks Obama's first major victory in Congress, less than a month after taking office.
The measure, aimed at combating the worst economic crisis since the Great Depression of the 1930s, marks Obama's first major victory in Congress, less than a month after taking office.
Speaking in his weekly radio and Internet address, Obama said, "I will sign this legislation into law shortly, and we'll begin making the immediate investments necessary to put people back to work doing the work America needs done."
At the same time, he cautioned, "The problems that led us into this crisis are deep and widespread, and our response must be equal to the task."
Earlier in the day, the US House of Representatives passed the USD 787 billion Economic Stimulus Bill in a 246 to 183 vote. The bill was passed with no Republican support. The final spending and tax cut mix in the USD 787 package stands at about 64% and 36% respectively.
Majority leaders like Stenny Hoyer accused Republicans of sticking to same policies of the failed eight years of the Bush administration.
Nancy Pelosi, House Speaker (Democrat), said the American people are feeling a great deal of pain. "They have uncertainty about their jobs, about healthcare, about ability to pay for the education of their children and sad to say in our great country even their ability to put food on the table. So, today we have passed legislation that does take that swift action on their behalf."
Senator Chris Dodd, Chairman, Banking Committee, said we are in the deepest economic crisis in the lifetime of any American. "They are worried about their pay. Our system of economy is at risk these days. We'll be judged by history as to whether or not we could respond intelligently to it."
At a press conference in the Treasury's ornate Cash Room, Paulson announced that nine large financial institutions "have already agreed to participate in the program." In this program US government will spent $ 250 bln to get stake in banks. The half of this $250 bln means $125 bln will be invested in country most preffred bank alone and remaning $125 bln, which is the amount of the first tranche Congress authorized Treasury to spend—to be invested quickly in other banks. After that, Treasury would ask Congress to authorize the next $100 billion in funding it approved.
The announcement came the day after Paulson called in the heads of six major banks and pressed them to "voluntarily" back Treasury's plan to devote $250 billion of the $700 billion recently approved by Congress to buy direct equity stakes in financial institutions in return for senior preferred shares."Our goal is to see a wide array of healthy institutions sell preferred shares to the Treasury, and raise additional private capital, so that they can make more loans to businesses and consumers across the nation," Paulson said in the statement. "At a time when events naturally make even the most daring investors more risk-averse, the needs of our economy require that our financial institutions not take this new capital to hoard it, but to deploy it."
Among the firms expected to get funding: JPMorgan Chase (JPM), Citigroup (C), and Bank of America (BAC) were to receive $25 billion apiece; Wells Fargo (WFC) was to get between $20 billion and $25 billion; Goldman Sachs (GS) and Morgan Stanley (MS) were down for $10 billion each, and the Bank of New York (BK) and State Street (STT) were slated for $2 billion to $3 billion apiece. Citigroup and Goldman Sachs declined to comment on this news.
Who's Said What
"We regret having to take these actions. Today's actions are not what we ever wanted to do - but today's actions are what we must do to restore confidence to our financial system." Mr Paulson added: "Government owning a stake in any private US company is objectionable to most Americans - me included.
"Yet the alternative of leaving businesses and consumers without access to financing is totally unacceptable.
"When financing isn't available, consumers and businesses shrink their spending, which leads to businesses cutting jobs and even closing up shop."
US President George W Bush said the effort is needed to boost confidence and avert a severe downturn.
This Business news fetched from AFP..
A story from Bloomberg News on Saturday reported Fannie and Freddie began telling bond traders last week that each company needs to buy $20 billion a month in mostly subprime, Alt-A and non-performing prime mortgage securities, Bloomberg said, citing three unidentified people familiar with the situation. 
The US Federal Reserve opened up its coffers Tuesday to companies hit by the credit crunch with a new program that will buy up commercial paper, short-term debt critical for many corporate operations.
The Fed gave no estimate of how much money would be devoted to the program but said the US Treasury would "make a special deposit" at the New York Fed to get the program rolling. The effort is aimed at getting banks and other portfolio managers to buy and sell commercial paper, short-term securities issued by companies and banks for payrolls and other day-to-day expenses. The market for commercial paper has been virtually frozen in recent weeks with banks and other financial firms reluctant to take on any risk and pumping their cash into US Treasury bills, which are guaranteed.
The Federal Reserve will provide financing to a special entity under the CPFF "and will be secured by all of the assets" of this entity. The Fed said the credit would be available to "eligible issuers," but offered few details. It said it would be open to US companies and other US issuer with a foreign parent firm. Companies will pay up-front fees paid or provide "security acceptable to the Federal Reserve in consultation with market participants."CREDITS AFP & Yahoo
