Cullen welcomes US Senate approval of finance bailout

Finance Minister Michael Cullen has welcomed the United States Senate's approval of a massive $US700 billion ($NZ1.04 trillion) rescue plan for the nation's finance system.

Dr Cullen like many others around the world is now hoping that the House of Representatives, where lawmakers rejected the original version on Monday, 228-205, will back the bill on Friday

A strong bipartisan Senate majority rallied behind the controversial Wall Street bailout package, passing it by 74-25, but only after tacking on an extra $US110 billion in tax breaks to lure votes from both parties.

Dr Cullen said the vote was important to restore confidence in financial markets whose collapse could send the world into economic recession.

"It is a very positive move, particularly because there was a very large majority for it, basically three to one in favour, and reports so far seem to indicate that the changes to the bill will be sufficient to insure enough votes in the House of Representatives," Dr Cullen said.

"It is very important, it is a pity that it has already been delayed as that will weaken the effect a bit. But restoring the confidence in the financial sector is very important and of course the bill has a number of measures in it to try and ensure as far as possible that those responsible for this whole sad and sorry saga aren't able to profit."

Dr Cullen said the views of those in the US who believe Wall Street should be allowed to crash ignored the repercussions of a US and worldwide economic recession potentially flowing from a complete loss of confidence in the finance sector.

Like the legislation the House rejected Monday, the Senate bill essentially creates a $700 billion federal programme to buy bad assets from banks and other financial firms at a steep discount.

President George W Bush , Treasury secretary Henry Paulson and Federal Reserve chairman Ben Bernanke have warned repeatedly that failure to pass the legislation would lead vital credit markets to seize up, forcing employers to lay off employees, plunging the economy into recession and perhaps even another Great Depression.-NZPA