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News Wrap: Spain Passes Austerity Measures to Fix Debt Crisis, Citizens Protest

July 20, 2012 at 12:00 AM EDT

HARI SREENIVASAN: Eurozone finance ministers approved a $37 billion bailout for Spain’s troubled banks today.

The announcement came hours after huge anti-austerity protests were held in 80 cities, like this one in Madrid. The crowds carried signs and shouted slogans denouncing new tax hikes and pay cuts for civil servants.

But Spain’s deputy prime minister said today there is no way around making hard choices.

SORAYA SAENZ DE SANTAMARIA, Spanish Deputy Prime Minister (through translator): In such a difficult situation, we only have two options, do whatever we can to get out of the crisis — and that is exactly why we’re doing what we are doing — or we could do nothing, which is what was done before and got us into this situation.

HARI SREENIVASAN: Also today, Spain’s most indebted region, Valencia, requested financial aid from the central government.

The events in Spain triggered new worries on Wall Street, and stocks fell sharply. The Dow Jones industrial average lost more than 120 points to close at 12,822. The Nasdaq fell 40 points to close at 2,925. For the week, both the Dow and the Nasdaq gained about a half-a-percent.

The U.S. Treasury Department warned today that the process for setting a benchmark global interest rate is still flawed. The agency said British banks remain capable of manipulating the so-called libor. Three weeks ago, Barclays Bank admitted it submitted false information about its borrowing costs in 2007 and 2008 to keep the rate artificially low. LIBOR affects rates on contracts worldwide, from home mortgages to business loans.

Those are some of the day’s major stories.