Historic bail-out bill passes US congress

 President George W Bush swiftly signed it into law.

The 263-171 vote in the House of Representatives capped two weeks of tumult in Congress and on Wall Street, punctuated by warnings from Bush that the country confronted the gravest economic disaster since the Great Depression if lawmakers fail to act.

"We have acted boldly to help prevent the crisis on Wall Street from becoming a crisis in communities across our country," Bush said shortly after the plan cleared Congress, although he conceded, "our economy continues to face serious challenges".

His sombre warning was underscored on Wall Street, where enthusiasm over the rescue gave way to worries about obstacles still facing the economy. The Dow Jones industrial average dropped 157 points. The Labour Department said earlier in the day that employers had slashed 159,000 jobs in September, the largest cut in five years.

Lawmakers added greater supervision over the $700 billion, including a process where Congress could vote to block half the money, measures to protect taxpayers and steps to crack down on "golden parachutes" for corporate executives whose companies benefit from the bail-out.

The historic vote was a striking turnaround from the measure's spectacular failure earlier in the week, which had triggered a massive stock sell-off and prompted jittery lawmakers, fearing a crushing economic contagion that was spreading to their constituents, to reconsider.

The bail-out, which gives the government broad authority to buy up toxic mortgage-related investments and other distressed assets from tottering financial institutions, is designed to ease a credit crunch that began on Wall Street but is engulfing businesses around the nation.