The bill now includes a revision to the FDIC's insurance limit from $100k to $250k and a ten-year $150.5 billion package of tax breaks. The bill also includes provisions for the FDIC to draw on an unlimited line of credit from the Treasury Department compared to the current $30 billion loan limit it currently has.

Otherwise, it is virtually identical to the one that failed in the House of Representatives earlier this week. The bill would allow the Treasury to purchase up to $700 billion in illiquid assets from financial institutions in various chunks.

Market reaction was initially muted given sentiment prior to the announcement that support in the Senate was already overwhelming, with major stock index futures in the United States declining in the minutes following the announcement. By 9:41 p.m. Dow futures were down 75 points on the day at 10787 compared to being up 54 points prior to the final vote, and flat on the day as the headlines hit the wires.

Still, given the events two days ago, when the House rejected the first version, fear that the legislation may yet again face defeat permeates every corner of the market. The first rejection of the bill Monday triggered one of the worst days ever seen on Wall Street and unprecedented losses in North America's major stock indexes.

The view from many U.S. Senators is that the losses on Monday reversed public opinion of the bill, which will likely prompt many of those who opposed the vote just a few days ago to reconsider their votes.

In the minutes that followed the announcement, U.S. Treasury Secretary Henry Paulson praised the senate decision, and urged the House of Representatives to quickly pass the legislation and help bolster the American economy.

In a press conference following the announcement, U.S. Senate Majority Leader Harry Reid and Minority Leader Mitch McConell both praised the work of Senators Dodd and Gregg for their work on the package.

"We've sent a clear message to America," said Reid, who praised the bipartisanship of the legislation.

"This has been the Senate at its finest," agreed McConell.

Chris Dodd warned that the motion was just the beginning of a difficult road for the United States, but hopes that a strong message of confidence was sent to the markets today.

In a press conference on Wednesday, House speaker Nancy Pelosi said the bill could not return to the House floor before Friday. She also said she wanted the bill to include additional provisions to the Senate version.

The news comes on the heels of a string of bad news for U.S. financial markets, with the Federal Deposit Insurance Corporation seizing Washington Mutual and selling most of its assets to JPMorgan Chase on Friday, followed by the acquisition of Wachovia and subsequent sale to Citigroup on Monday.

In recent weeks, the Fed agreed to an $85 billion loan to American International Group, but allowed Lehman Brothers to file bankruptcy and subsequently be sold to Barclays PLC.

The impact of the turmoil has also reached as far as Europe with Fortis Bank in the Benelux, Hypo Real Estate Bank in Germany and Bradford & Bingley in the UK all receiving government funds on Monday.

By Erik Kevin Franco, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Megan Ainscow, This email address is being protected from spam bots, you need Javascript enabled to view it

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