Congress gives go-ahead for financial rescue plan

21st October 2008, Comments 0 comments

The Spanish government will start buying bank assets as of November to free up banking system.

21 October 2008

MADRID -- The government will start buying bank assets from November after Prime Minister José Luis Rodríguez Zapatero secured near unanimous congressional support Monday for a package of financial measures aimed at easing credit conditions and restoring confidence in the financial system.

The plan, which was backed by all but five lawmakers, will allow the government to spend between EUR 10 billion and EUR 30 billion from the start of November to buy "high quality assets" from banks in order to free up money for lending.

Other measures include guaranteeing bank loans up to EUR 100 billion and raising the amount of savers' money guaranteed by the government from EUR 20,000 to EUR 100,000 per bank.

Zapatero described the measures as a "necessary and unavoidable public intervention", and denied claims that European governments are using the financial crisis to permanently nationalise the banking system.

"Nothing is further from the truth," he said.

However, in light of the events of recent weeks, Zapatero said the "world financial system must be reordered" with more regulation to avoid the "intolerable greed" that he blamed for the current problems.

The vast majority of opposition lawmakers backed the rescue plan, but called for tight controls to prevent money being wasted and for the needs of families and small businesses to be put first.

"It is my responsibility to support this and it is in the general interest of the Spanish people to do so," opposition Popular Party leader Mariano Rajoy declared. "However, we also need a rescue plan for families."

[El Pais / Ángeles Espinosa / Expatica]

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