Bailout package to cost every American family $6,500

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Washington, Sep 24 : Every American family will become poorer by $6,500 (about Rs 3 lakh) in the process of funding the much debated$ 700 billion bailout package mooted by the Bush administration to save the financial institutions from going bust.

Bailout legislation that may sail through Congress this week will cost about $ 6,500 per US family, a little over $ 2,000 per person, said US media reports quoting a blog WashingtonWatch.com.

‘‘It is possible that the Federal government will not expend all of those $ 700 billion, or even make some money back later, but I agree with those who call that possibility laughable,’’ WashingtonWatch.com Webmaster Jim Harper was quoted as saying in the report.

The financial crisis triggered by the subprime mortgage turmoil had forced 158-year-old Lehman Brothers to file for bankruptcy protection and the distress sale of Merrill Lynch to Bank of America.

The crisis also forced the US government to bailout Freddie Mac and Fanny Mae and insurance major AIG, while Investment banking majors Morgan Stanley and Goldman Sachs have transformed into banking companies under the direct purview of Federal Reserve.

The draft legislation, according to the reports, would raise the public debt limit to $ 11.3 trillion , leading to $ 116,000 per family, or $ 37,000 per person.

The US Senate has begun the debate on the bailout package proposed by the Bush Administration. Fed Chairman Ben Bernanke and US Treasury Secretary Henry Paulson had urged the Senate to take a decisive action as the steps already taken were not sufficient.