King in talks at Number 10

This morning Mervyn King, governor of the Bank of England, met with Prime Minister Gordon Brown and chancellor Alistair Darling following the failure of the $700bn American rescue package.

The three held the emergency talks to address the floundering economy and financial sector as the FTSE dropped 2.3% to 4705.5 – its lowest point since December 2004.

In an interview with Sky News Treasury minister Yvette Cooper says: “We’re obviously keeping in close touch. There are meetings between the governor of the BoE and the regulator, the Financial Services Authority, as well.

“That’s been the case continually and will continue to be the case. We obviously need to monitor events very closely. We’re disappointed really with the events in the US, the fact that they didn’t get a deal.”

President Bush is said to be pleading with Nancy Pelosi, speaker of the House of Representatives, for help to pass a new version of the bill that will likely be revealed on Thursday when members of Congress return from a two-day holiday marking Jewish new year.

Pelosi’s speech last night was thought to be a main factor in the rescue bill’s failure. She says she will work toward a revised version but insists that the role of Congress is to protect the taxpayer and says doing so will remain the priority.

In her speech before congress she says: “Our message to Wall Street is this: the party is over. The era of golden parachutes for high-flying Wall Street operators is over.

“No longer will the US taxpayer bail out the recklessness of Wall Street. The taxpayers who bear the risk in this recovery must share in the upside as the economy recovers.”