Democrats attempt to add bailout plan commitments

WASHINGTON (CNN) -- U.S. President George W. Bush urged Congress Monday to put his financial rescue plan into action, without adding "unrelated provisions" or "provisions that would undermine the effectiveness of the plan."

Bush's economic team sent Congress a $700 billion financial rescue package over the weekend, after a crisis in the markets led to the collapse of a major investment bank, the sale of another, and a government rescue of a gigantic insurance company last week.

But the Democrats who control Congress want to put their own stamp on it.

House Financial Services Committee Chairman Barney Frank told reporters the Treasury Department agreed to add an oversight board and mortgage foreclosure relief measures to the bailout package.

The Treasury has also agreed that the government would buy shares of the companies it bails out, the Democrat said.

Congressional Democrats and the Treasury still disagree about placing limits on executive compensation and adding a provision allowing bankruptcy judges to alter terms of mortgages.

News of the U.S. bailout plan had a largely positive effect on Asian markets Monday.

In Asia, Japan's Nikkei 225 index climbed 1.4 percent to close at 12,090.59 points, while Hong Kong's Hang Seng Index rose 1.6 percent to 19,632.20.

In China, the Shanghai Composite Index soared 7.8 percent on hopes of a turnaround after government steps to stabilize the country's beaten down shares.

Markets in Australia and Taiwan also advanced strongly after their regulators issued curbs on short selling, following similar moves in the U.S. and Britain. Short selling, which bets on a stock's decline, has been partly blamed for driving down share prices.

But in Europe, markets ended the day down. Britain's FTSE 100 lost 1.25 percent to 5245.04, Germany's DAX was down 1.2 percent to 6,115.07 and France's CAC 40 fell back 2.14 percent to 4,232.32.

And on Wall Street the Dow Jones industrials spent most of the day in negative territory closing about 3.3 percent down. The Nasdaq was down 4.2 percent and the S&P fell 3.8 percent.

Microsoft announced plans to repurchase its stocks, while Morgan Stanley said it was working to sell up to a 20 percent stake to Japan's Mitsubishi UFJ Financial Group.

Meanwhile, cash demand showed some signs of easing as European central banks offered more liquidity to money markets.

According to the Bank of England, it offered $40 billion in a one-day tender, for which the bank said it received $26 billion in bids, but didn't indicate from how many banks.

But the European Central Bank said it received bids worth $82.1 billion for the $40 billion it offered in a one-day transaction, or more than double what it had offered.

Japan's central bank pumped another ¥1.5 trillion ($14.1 billion) into short-term money markets, the ninth injection over five straight working days.

The moves follow a decision last week by central banks in Europe and North America to inject billions in cash to support money markets in the aftermath of the bailout of AIG and the bankruptcy of Lehman Brothers.

Global markets had rallied Friday on news Washington was likely to announce a bailout plan, calming investors worried that losses from bad bets on mortgages could bring about the collapse of yet more companies, straining an already weakened financial system and global economy.

As details of the plan took shape over the weekend, the Bush administration continued to lobby lawmakers Sunday for authority to use $700 billion to buy up a mountain of bad debt at the heart of the crisis.

While the proposed bailout lifted sentiment for the time being, there were still a number of uncertainties about the plan and the general health of financial firms that could further unsettle markets in the coming days, an analyst said.

"This should stem the bleeding, but the patient is still very fragile," AP quoted Thomas Lam, a senior economist at the United Overseas Bank in Singapore, as saying. "The list of uncertainties is pretty long."

The U.S. bailout proposal also encouraged a rise in oil prices in Asia Monday, as investors grappled with the possible impact on crude demand.

Light, sweet crude for October delivery was up $1.32 to $105.93 a barrel, after falling as low as $103.35, in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. On Friday, the contract rose $6.67 to settle at $104.55 on initial hopes the rescue plan would stabilize the U.S. financial system and help boost economic growth.

"There are a lot of issues to be filled in. It's an extraordinarily complex situation," David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney, told AP. "The market is digesting how the package will work and the implications for the U.S. economy."

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