French parliament to take up bank rescue plan

France's top bankers and insurers soberly welcomed a euro360 billion (US$491 billion) plan to guarantee that the nation's banks don't collapse, as French legislators prepared Tuesday to take up the costly measure.

President Nicolas Sarkozy met with 11 leaders of France's banking and insurance sector to present the plan. It is part of an unprecedented weekend decision by 15 nations that share the euro currency to unblock frozen credit markets, after a tailspin on stock exchanges worldwide last week.

Sarkozy rallied European governments to act together at a summit Sunday in Paris, then on Monday announced details _ and the huge potential cost _ of France's part of the package.

The money includes euro320 billion (US$436 billion) in guarantees for bonds and other loans that banks take out. If the banks make good on that debt, then the French government _ and by extension, taxpayers _ won't have to pay anything, officials have said. The idea is to free up money so that banks can start lending to consumers and businesses again.

The other euro40 billion (US$54 billion) will go to a government-backed agency to provide banks with extra capital. That part of the plan also allows the government to take stakes in troubled banks that get state capital.

The figures are a maximum, which may not be reached if the market starts functioning normally again.

After Tuesday's meeting with Sarkozy, the bankers insisted they wouldn't take the gesture lightly.

"We assured the public authorities of our will to fully and responsibly carry out" the plan, the head of the French Banking Federation, Georges Pauget, told reporters. "We will now have the means to do so," thanks to the rescue measures, he said.

Meanwhile, the lower house of parliament was gearing up to debate the plan later Tuesday and Wednesday.

While a lively debate was likely, the plan is expected to win parliamentary approval. Both houses of legislature are controlled by Sarkozy's conservative UMP party, which has largely supported the president through the crisis, despite divisions.

In an unusual move, the main opposition Socialist Party decided to abstain from the voting, according to Jean-Marc Ayrault, the leader of the Socialists in parliament.

"It's not a question of opposing a European plan that would allow us to get out of the initial turmoil of the financial crisis. Nor is it a question of approving the policy of Nicolas Sarkozy in the economic sphere. It, also, is responsible for the situation we find ourselves in," Socialist Party chief Francois Hollande said.

Communist lawmakers planned to oppose the measure.

"We don't want this money placed by the state to once again serve speculation," Communist Party leader Marie-George Buffet said Tuesday.

If approved, the plan is expected to be published in the official register by the end of this week.

Most of the money in the French plan will be available for government guarantees for banks and insurers, allowing them to raise money through bond sales and other loans with maturities of up to five years. The hope is that this will give banks confidence to start lending again.

After a series of plunges last week, France's CAC-40 stock index skyrocketed 11.2 percent Monday and was up 5.4 percent in morning trading Tuesday after news of the European plans.

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Associated Press writer Laurent Pirot contributed to this report.