The US House of Representatives rejected on Monday the $700 billion rescue plan which had been initiated by the Bush administration to bail out the country’s finance sector devastated by a massive meltdown.

The measure which would have authorized the biggest government intervention in the markets since the Great Depression went down mainly due to partisan wrangling and was defeated by a vote of 228 to 205. While Democrats voted 140 to 95 in favor of the legislation, only 65 Republicans supported the bill and 133 voted against it.

The finance rescue proposal, if passed, would have set aside $700 billion for Treasury Secretary, Henry Paulson to buy up troubled assets of finance companies. This would have gone a long way in easing up the credit crunch which continues to affect the economy in the aftermath of last year’s housing market crisis.

Markets reacted strongly to the defeat of the bail-out measure. While the Dow Jones Industrial Average plunged by 778 points or 6.98% in the biggest drop ever, the Standard & Poor’s 500 Index sank by 8.4%.

Despite Monday’s defeat, it is not yet the end of the road for the finance rescue bill. Majority leader, Steny Hoyer’s announcement that the House would take up the measure again during the week thus has already started off a scramble among its backers to garner additional support.

Wachovia Corp ended days of negotiations with potential buyers by reaching a 2.16 billion deal with Citigroup Inc, the biggest bank in the United States by assets.

According to the terms of the all-stock deal, Citigroup Inc will acquire the banking operations of Wachovia Corp for $2.16 billion and will pay $1 for each share of Wachovia. However the Federal Deposit Insurance Corp has assured that all depositors will be protected. The New York-based Citigroup plans to slash its own dividends by half and raise around $10 billion in capital so as to take on the senior and subordinated debt of Wachovia. The acquisition will land Citigroup with an extensive network of Wachovia branches and offices totalling 3300 in 21 states. However, Wachovia will keep its control of the A.G. Edwards Inc brokerage and the Evergreen mutual-fund family.

Charlotte-based Wachovia Corp is the sixth largest US bank by assets but owing to overdue mortgages, the bank experienced massive collapse of its shares and was thus compelled to look for a buyer. The acquisition of Wachovia Corp is the latest development in the country’s finance sector which has been rocked by the failure of major institutions like Lehman Brothers and Washington Mutual as well as by the takeovers of Merrill Lynch and Bear Stearns Co.

In yet another sign of the financial crisis spreading from US to Europe, the British government has decided to nationalise the beleaguered mortgage lender Bradford & Bingley.

The Treasury announced on Monday, that the British government would take over the bank’s mortgage and loan books, worth 50 billion pounds or $90 billion in an attempt to maintain financial stability in the country. The government has also incurred an additional expense of 18 billion pounds or $30 billion in order to facilitate the sale of the savings business of Bradford & Bingley to Banco Santander of Spain. According to the terms of the sale, Santander would pay 612 million pounds or $1.1 billion for the complete retail network of Bradford & Bingley which includes 197 branches and deposits of 20 billion pounds.

Banco Santander is the second largest bank in Europe and its purchase of the retail division of Bradford &Bingley marks the latest instance of major financial institutions being brought back from the brink, either by acquisition or government rescue. While Fortis, the Belgian and Dutch financial firm received a boost from joined efforts by three European governments, Germany’s Hypo Real Estate Holding AG was saved from collapse by a multibillion euro line of credit from several European banks.

Fortis, the Belgian-Dutch financial services company received a breather after three European governments came together to bail out the firm from collapsing into bankruptcy.

The governments of Netherlands, Belgium and Luxembourg have agreed to jointly raise 11.2 billion euros or $16.3 billion in order to save Fortis from sinking into insolvency. The bank has been incurring huge losses in the wake of a series of credit-related write-downs. Fortis is the largest European bank so far to have been pulled down by the market crisis affecting financial sectors across the globe.

Under the terms of the bail-out package, Fortis will have to give up the sections of ABN-Amro it acquired last year. On the other hand, each country will invest in equal-sized stakes in Fortis’ banking operations of that country. Belgium for instance will buy a 49% stake in the banking units owned by Fortis for 4.7 billion euros or $6.8 billion. likewise, Netherlands is buying a similar-sized stake in Fortis’ Dutch banking units for 4 billion euros or $5.8 billion while Luxembourg plans to extend a loan of 2.5 billion euros which can be converted to a 49% stake in Fortis’ banking business in Luxembourg.

One of the major losers in the multinational bail out of Fortis will be its largest shareholder, Ping An Insurance of China.

Rhode Island is set to receive almost $20 million in federal grants from the Department of Housing and Urban Development in order to buy, redevelop or sell foreclosed properties in the region.

The Department of Housing and Urban Development has approved a grant of $19.6 million for Rhode Island which has been hit badly by the housing market crisis since last year. According to Rhode Island Senator Jack Reed of the Democrat Party, the nearly $20 million aid would enable homeowners as well as communities to stay protected from devaluing impact of foreclosed properties that fall into disrepair. In areas suffering from foreclosures, it is necessary to renovate and sell foreclosed properties since vacant properties attract crime and blight which eventually drive down real estate prices in the area.

Rhode Island has the highest rate of foreclosures in the New England region. Nationally, Rhode Island ranks sixth in the list of most foreclosed properties started during the second quarter of the current year. Around 1700 mortgage holders in Rhode Island initiated foreclosure proceedings in the three-month period ending June 30. Practically the whole of United States continues to suffer the after-effects of last year’s housing market crisis which not only led to the collapse of major mortgage lenders but left many homeowners with the prospect of foreclosed properties.