The Bush administration is urging U.S. lawmakers to quickly pass its
sweeping 700-billion-dollar bailout plan for financial institutions
that are holding large amounts of bad mortgage debt.
U.S. Treasury Secretary Henry Paulson said in television interviews
Sunday that failure to take action to resolve the financial crisis will
result in economic catastrophe.
Secretary Paulson appeared on news programs to promote the
plan for the government to take over bad property loans, or securities
based on those loans, from private financial companies.
Paulson said foreign banks with assets in the United States will also
be eligible for the help. The treasury secretary added that he is
pressing other national governments to offer relief plans to their
Democratic Party Senator Charles Schumer, chairman of the Joint
Economic Committee in Congress, said Sunday he wants the plan to
include relief for U.S. homeowners facing foreclosures, in addition to
large financial companies. Democrats are also calling for an economic
stimulus package to accompany the debt buyout.
U.S. House Speaker Nancy Pelosi said the bailout plan lacks "necessary
safeguards" in several areas. She called for "independent oversight,
protections for homeowners and constraints on excessive executive
Senate Republican leader Mitch McConnell said the bailout plan should
remain free of what he called "partisan plans or pet projects."
White House officials and congressional leaders have said they hope the legislation can be passed as early as this week.
The Treasury Department says the plan includes raising the national
debt limit by 700-billion dollars, to 11-point-three trillion dollars
in the 2009 fiscal year.
Paulson said the U.S. financial system also needs new regulations and
policies to more thoroughly reform what he called an outdated and
outmoded system. He called the bailout plan a "very strong step" in
Financial markets around the world plunged last Monday when Lehman
Brothers, a major investment bank, was allowed to collapse. Later in
the week, the U.S. Federal Reserve gave an 85-billion-dollar loan to
bail out American International Group, or AIG, the world's largest
insurance company. AIG nearly collapsed after major losses in the
U.S. officials say millions of U.S. mortgage loans are in default or
foreclosure. When homeowners cannot repay their loans, it damages
mortgage-based lenders and investments.