Italy Unveils $100 Billion Economic Bailout

By Colleen Barry

MILAN, Italy -- The Italian government on Friday announced an euro80 billion ($103.2 billion) emergency package offering relief to banks, families and companies suffering in the global economic crisis.

The package, which is part of a proposed euro200 billion European Union effort to combat the world economic downturn, includes aid to needy families, public works projects and mortgage relief.

"The middle class can maintain the same lifestyle," Premier Silvio Berlusconi told a news conference in Rome after his Cabinet approved the measures. "The length of the economic crisis depends on all of us, on our capacity to trust and to look at the future with hope."

The measures include euro2.4 billion cash payments for needy families -- expected to reach 8 million people. Other funds are earmarked for infrastructure, such as structural improvements to schools after a week that saw one student killed when a classroom roof collapsed, and a separate fund of euro960 million for the national railway.

Under the decree approved at a Cabinet meeting Friday, highway tolls will not be increased for the first six months of the year. The emergency measure must be approved by Parliament, where Berlusconi's conservatives enjoy a comfortable majority.

The government also agreed to underwrite convertible bank bonds to help raise capital for the banks. It previously passed a measure to buy preferential stock without voting power for any bank in need, but none have yet sought the relief.

The measures also put a 4% cap on variable mortgage rates already in hand, and from Jan. 1 link future variable mortgages to interest rates set by the European Central Bank.