Buying $700 Bn In Troubled Assets With Taxpayer Money

President Bush, flanked by Federal Reserve Chairman Ben Bernanke, left, and Treasury Secretary Henry Paulson, delivers a statement about the economy and government efforts to remedy the crisis, Friday, Sept. 19, 2008, in the Rose Garden of the White House in Washington. Associated Press © 2008

The plan to buy $700 billion in toxic assets with taxpayer money was shaped by Bernanke and Paulson, would be the government's largest economic rescue in modern times, one that rivals the Iraq war in cost and at the same time may redefine Washington's role in the marketplace for years. It's the largest since the Great Depression, to lawmakers and the American people.

Along the way, they have cast aside the administration's long-held views about regulation and government involvement in private business, even reversing decisions over the space of 24 hours and justifying them as practical solutions to dire threats.

"There are no atheists in foxholes and no ideologues in financial crises," Bernanke told officials last week, according to one participant.

The Bush proposal that would dole out huge sums of money to Wall Street firms and bankers is a mere three pages in length and fails to specify which institutions would qualify or say what — if anything — taxpayers would get in return.

"It's a rather brief bill with a lot of money," said Sen. Chris Dodd, D-Conn., the Banking Committee chairman. "We understand the importance of the anticipation in the markets, but we also know that what we're doing is going to have consequences for decades to come. There's not a second act to this — we've got to get this right."

Democrats, who say they will work with the administration to pass a plan, are demanding it include relief for homeowners struggling with mounting debt, not just for Wall Street.

The proposal would raise the statutory limit on the national debt from $10.6 trillion to $11.3 trillion to make room for the massive rescue.

Source :

1. HeraldTribune.com : Paulson and Bernanke in legislative cockpit
2. NPR.org : Bush Proposes $700 Billion Wall Street Bailout Plan

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