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White House Urges Swift Passage of Bailout Plan

  • VOA News

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 financial institutions.

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 compensation."

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said the U.S. financial system also needs new regulations and policies to more thoroughly reform what he called an outdated and outmoded system.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 that direction.

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 housing crisis.

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.

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