Congress urged to act quickly to approve $700bn financial rescue plan

US billionaire investor, Warren Buffett, has described the current financial turmoil as ‘an economic Pearl Harbour’.

Buffett, who is one of the world’s richest men, and US Federal Reserve chief, Ben Bernanke, are urging US Congress to quickly approve the $700 billion (£380 billion) financial rescue plan or risk serious consequences to the US economy.

Meanwhile, President George W. Bush addressed the US public on prime-time television to convince them of the need for the proposed rescue, saying that there was a risk of the US economy falling into recession and this must be avoided at all costs.

Treasury Secretary, Henry Paulson, has told Congress that the proposal was about ‘benefiting the American people because today’s fragile financial system puts their economic well-being at risk’.

It is understood that the plan includes a clampdown on bankers’ pay as previously, Mr Paulson said bankers must have unfettered ability to set their compensation packages, or they might not apply for help under the plan.

Both Democrat and Republican politicians have expressed strong scepticism about the plan, under which a federal fund could buy bad debt from financial institutions with significant operations in the US.

Congressmen from both sides said they wanted assurances that the plan would benefit ordinary American home-owners as well as Wall Street.

However, despite efforts from many sides, global financial markets are still in turmoil. The FTSE 100 index fell 3.7 points in early trading to 5091.9, with analysts predicting an anxious trading session.

The events of the last two weeks have seen the collapse of Wall Street giant, Lehman Brothers, the rescue of US insurance giant AIG, Bank of America’s takeover of Merrill Lynch and in the UK, Lloyds TSB’s takeover of HBOS.

In the meantime, according to a top EU official, Europe does not require a US-style bail-out of banks, but must implement stricter financial supervision.

Economy commissioner, Joaquin Almunia, said the situation in Europe was ’less acute’ than that of the US and unfreezing credit markets was unnecessary.

Jean-Pierre Jouyet, France’s state secretary for European affairs, added that the European financial system was ‘still stable’.

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