America’s real estate market is still under threat along with other industries after US politicians failed to pass a $700 billion financial rescue deal.
Democrats and Republicans alike had backed the plan, which would see the government buying ‘toxic debt’ from banks approaching difficulties.
However, the scheme did not make it through the House of Representatives, prompting global shares to plummet.
Earlier, US president George Bush had warned the country would face serious financial consequences if a deal could not be reached.
Many US financial institutions have faced difficulties after home owners defaulted on their mortgages, creating a wave of foreclosed homes.
While some property investment specialists have profited by buying up the cheaper properties, others have themselves struggled with repayments on buy to let investments.
The bill had stated it was designed to
“provide authority for the Federal Government to purchase and insure certain types of troubled assets for the purposes of providing stability to and preventing disruption in the economy and financial system and protecting taxpayers”.
Problems in the US began after the turmoil in the sub-prime mortgage market led to a credit crunch.
Critics of the rejected rescue plan said it would save reckless Wall Street operators while exposing tax payers’ money to risk.
President Bush and Treasury officials are now expected to begin urgent work on a new or revised deal.