House starts debate on bailout bill

By Eddie Evans

NEW YORK (Reuters) - The House of Representatives was poised to vote on a $700 billion bailout package for U.S. banks, under pressure from all sides as the effort to head off a spreading financial crisis hung in the balance.

Wells Fargo & Co stepped in to buy Wachovia Corp, a bank badly hobbled by the credit crisis. The deal provided a rare bit of positive news for the financial sector, sending markets higher.

In Paris, French Prime Minister Francois Fillon said the world stood on the "edge of the abyss" as European leaders were divided over their own response to the global crisis.

With a vote expected to begin as early as 12:15 p.m., House leaders were still working the phones to get support.

"I'm optimistic about today. We're not going to take anything for granted," said House Republican leader John Boehner. "We're going to continue to talk to our members but it's time to act."

The House shocked world markets on Monday by rejecting a previous draft. With elections on November 4, lawmakers are wary of voter backlash in asking taxpayers to pay for Wall Street's mistakes.

The bill would allow the Treasury to buy toxic debt from U.S. banks, which many economists said is needed to head off the worst financial crisis since the Great Depression.

U.S. stocks rose on hopes for the bailout plan and the deal to buy Wachovia.

Wells Fargo, one of the strongest U.S. banks, said it didn't need the government help that Citigroup Inc required in an earlier rescue effort.

The dollar continued to rally against the euro and European stocks rose.

Earlier on Friday, the United States reported its biggest monthly job loss in 5 1/2 years, more evidence of an approaching recession. Data showed the U.S. services sector holding up.

"The data has been horrible all week long. It absolutely does put pressure on them to get this rescue act passed," said Fred Dickson, market strategist at D.A. Davidson and Co in Lake Oswego, Oregon. "It's a bill with risks, but it's a plan and the market needs a plan."

Action on the U.S. bailout was of paramount importance, European Central Bank President Jean-Claude Trichet said.

"(U.S. Treasury) Secretary (Henry) Paulson's plan obviously must be passed," he told Europe 1 Radio. "It must be. It is necessary."

On Thursday, House Speaker Nancy Pelosi had said the bailout package would not be brought to the floor without the votes secured to pass it.