IT is impossible to predict the short and long-term effects of the $700 billion rescue package for American banking that has been the subject of intense negotiations between the US government and Congress for the past ten days. Yesterday world stock markets were in an extremely nervous state over the deal being put to the vote in the House of Representatives. The stakes could hardly be higher. At the same time, however, those of us on the sidelines of the frenzied action might find it worthwhile to observe how impressive American democracy can be when put to a test of this kind. We have seen the “separation of powers” so often referred to in text books actually put into practice.

Initially President Bush and his financial advisers proposed a $700 billion rescue with very few safeguards or projections of possible long-term consequences and asked Congress to nod through the necessary legislation quickly. However, elements in both parties in Congress did not like what they saw: they found the proposals too sympathetic to inefficient banks and their senior executives and lacking any formal oversight; they also worried about the eventual cost in the tax burden of ordinary citizens. Changes to meet these points have been incorporated in the draft legislation now being voted on. Congress has acted in the interests of the citizen to prevent flawed White House proposals being rushed through into law. The delay may be criticised but it will probably be justified in the end.