In an unusually speedy move, German President Horst Koehler signed into law a massive 500-billion-euro financial rescue package on Friday, hours after it was approved by both houses of parliament amid fierce debate.

The law will take effect starting Saturday, Oct 19, well in time before trading on financial markets opens on Monday.

The upper chamber of Germany's parliament approved the bank bail-out package announced four days earlier by Chancellor Angela Merkel's government. The unanimous vote in the Bundesrat upper chamber followed a majority vote in the lower chamber or Bundestag.

The Bundestag lower chamber passed the bill with only two small opposition parties, the Left and the Greens, opposed. In the vote, 476 members supported Chancellor Angela Merkel's government and 99 were against.

Bolstering tottering banks

The package aims to shore up confidence in banks following weeks of market turmoil. It foresees up to 400 billion euros in lending guarantees for banks. On top of that, up to 80 billion euros are to be made available to recapitalize banks and buy up risky assets if necessary while another 20 billion euros is to back up the guarantees.

The sums are considered a maximum, and might not all be spent if the financial crisis eases.

Chancellor Merkel unveiled the plan on Monday this week as part of a concerted effort by governments around the world to stabilize markets and help troubled financial institutions limp through the crisis.

The current efforts differ from the $700-billion takeover of bad assets by Washington last month, since they aim to breathe life back into world banks paralyzed by the crisis that began as a crash in the US subprime mortgage market.

A plan for citizens, not for bankers

German Economics Minister Michael Glos insisted that the government's plan was aimed at protecting the nation's citizens rather than the bankers. There was no reason for pessimism about the outlook for the economy.

"The opposite," he said. "We can solve the problems."

Chancellor Angela Merkel has insisted the bailout would help avert further harm to Europe's biggest economy, which is expected to grind to a near-halt next year.

In an unusual move to save time, the bill was then emailed back to German government offices, a few hundred meters away, for its final formalities, including a signature by the finance minister, the chancellor and President Horst Koehler.

Most of the euro zone nations and some allies have agreed to identical aid packages, each comprising a huge guarantee for interbank lending and semi-nationalizations of banks by state equity funds.

Germany has not identified which banks need rescuing, but the nine Landesbank companies owned by the states are seen as the weakest units. Two of them, WestLB and BayernLB, were hurt by investing in low-grade derivatives.

News agency AFP quoted a financial source saying Germany's biggest bank, Deutsche Bank, would not seek state aid.

"Deutsche Bank's capital structure is very strong, as a result there is no need to seek state aid," AFP quoted the unnamed source as saying.

The Bundestag agreed to the plan amid signs of an element of calm returning to European share markets Friday after days of turbulence.

However, the German parliament's backing for the plan is unlikely to save Europe's biggest economy from a sharp downturn as the financial crisis hits growth around the world.

In the run-up to the plan's passage through parliament, the German Government slashed its 2009 economic growth forecast to a feeble 0.2 percent.

Party meetings lead to unease and discontent

Despite being approved by Merkel's cabinet on Monday and by the country's 16 states on Thursday, the plan was still being fiercely debated on Thursday evening during a round of party meetings.

The Social Democrats, who initially signaled their full support for the plan, called for a revision of the proposed bill before Friday's Bundestag debate. The SPD insisted that a caveat must be added that makes it clear that responsibility for any losses to the state through the package must be taken by those German banks accepting aid.

The free market liberal opposition Free Democrats party (FDP) also decided after its previously unanimous support for the package that the handling of the current financial crisis needed stricter controls, calling for a more future-orientated plan which would bolster the German economy against further demands.

Guido Westerwelle, leader of the FDP, also warned the government not to give up its target to curb spending and balance the budget over the crisis.

Both the Green Party and the Left party emerged from their meetings with a more critical stance, saying that the level of parliamentary control over the package was insufficient. Both made it clear that the parliamentary "cooperation committee," which would oversee the implementation of the package, had to guarantee "effective and thorough control of the federation for the banks" while government control of the plan had to be strengthened.

"It's a 500-billion-euro blank cheque," said Green parliamentary chief Renate Kuenast.

Left party unanimously rejects plan

The opposition Left Party unanimously rejected the rescue package at its meeting.

The Left party's parliamentary group accused the government of not recognizing the full extent of the recession threat facing Germany and that, instead of a financial sticking plaster, the country needed a full reform of its economic program.

Left party leader Oskar Lafontaine called for measures to boost domestic demand, adding that many Germans found the cabinet's multi-billion bank rescue package hard to fathom as they suffered the effects of a weakening economy.

"When we asked for more money for Hartz IV (unemployment benefits), the answer was 'There's no money.' When we asked for more money for pensioners, the answer was 'There's no money,'" Lafontaine said. "People are surprised that, all of a sudden, 500 billion euros are readily available to manage the crisis...The people don't understand that any more," he said.