The US Senate last night approved 74 to 25 an altered version of the $700-billion bailout package that had suffered a shock 228 to 205 defeat in the House of Representatives (See: Shock defeat for $700-billion bail out plan), in a bi-partisan effort backed by 40 Democrats and 33 Republicans and independent Senator Joe Lieberman in the 100-member Senate.

Rival presidential ptretenders Senator Barack Obama and Republican John McCain rturned from campaigning to support the plan.

Components of the new package include:

• Require the Treasury Department to guarantee, at up to 100 per cent, bank losses resulting from failed mortgage-backed securities originating prior to the plan's enactment. Such insurance, supporters say, would provide immediate value to the securities and a foundation for which they could then be sold. The Treasury Department would finance that insurance by assessing a premium on outstanding mortgage-backed securities.
• Allow companies to carry back losses arising in tax years ending in 2007, 2008, or 2009 back five years, generating a tax refund and immediate capital
• Allow a "repatriation window" for profits earned by US firms overseas. Such repatriation amounts would not be taxed if invested in distressed debt (as defined by Treasury) for at least one year
• Allow banks to treat losses on shares of preferred stock in Fannie Mae and Freddie Mac as ordinary losses, not as capital losses
• Suspend the capital gains tax rate for two years
• Limit backing of high-risk loans by Fannie Mae and Freddie Mac
• Schedule Fannie and Freddie for privatisation
• Suspend "mark-to-market" accounting until the SEC can issue new guidelines that will allow firms to mark these assets to their true economic value.
• Stabilize the dollar by repealing the Humphrey-Hawkins Full Employment Act, which alternative bailout supporters say diverts the Federal Reserve's attention from long-term price stability to short-term economic growth
• Require the Treasury to write rules prohibiting excessive compensation or golden parachutes to executives of failed companies
• Task the SEC with regular, annual audit reports of entities the federal government has brought under conservatorship or now owns

The bill was a bipartisan effort, with 40 Democrats, 33 Republicans and independent Joe Lieberman of Connecticut voting for it. The two presidential nominees, Democrat Barack Obama and Republican John McCain, returned from the campaign trail to vote for the plan, which the proponents of the bill hope will meet the approval of the Representatives to whom it will now go back for support before it can be enacted.

Under the US constitution all financial legislation must be approved by the 435-member House of Reprsentatives.