Stock markets were sent into free-fall yesterday as the US Congress rejected proposals for a $750bn bailout of the countries collapsed financial system.
The US Governments proposal would have seen the record sum pumped into financial institutions to help keep the US economy afloat after a series of high-profile collapses, including Bear Stearns, Fannie Mae, Freddie Mac and IndyMac.
The defeat of the bill sent stocks plummeting, with the Dow Jones closing 770 points down (6.9%) – a record points drop in a single trading day.
Meanwhile the Nasdaq index fell 9.1% and London's FTSE 100 index lost 5.3%.
The drop spelt yet another day of unrest in the financial markets which saw a number of banks, including Bradford & Bingley, being saved by outside intervention.
Wachovia, the fourth-largest US bank, was bought by larger rival Citigroup in a rescue deal backed by US authorities whilst European banking giant Fortis was partially nationalised by the Dutch, Belgian and Luxembourg governments to ensure its survival.
The Icelandic government became the latest to nationalise an ailing bank, taking control of the country's third-largest bank, Glitnir.
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