The Bush administration is asking Congress to let the U.S. government
buy $700 billion in bad debt. The huge bailout is designed to
calm the turmoil on the world's financial markets. And as VOA's Kent
Klein reports from Washington, Democratic presidential nominee Barack
Obama says he supports the plan.
The proposal introduced on
Friday would give the government power to buy bad debt, such as
mortgages that can not be paid back, from any U.S. financial
institution for the next two years.
The White House and
congressional leaders have said they hope the legislation can be passed
as early as next week. Democrats and Republicans on Capitol Hill have
agreed to the broad outline of the program, and are working out the
details. U.S. President George Bush says he will work with Congress to
have the bill approved quickly.
"The systemic risk was
significant, and it required a significant response, and Congress
understands that, and we will work to get something done as quickly and
as big as possible," he said. "There is going to be hundreds of
billions of dollars at risk. This is a big package, because it was a
big problem."
Mr. Bush says this plan requires putting large
amounts of taxpayers' money at risk, but a massive response was needed.
"I will tell our citizens and continue to remind them that the risk of
doing nothing far outweighs the risk of the package, and that, over
time, we are going to get a lot of the money back," he said.
The
president says he recognized that Americans were beginning to lose
confidence in the country's financial system, and that something had to
be done.
"The government needed to send a clear signal that we
understood the instability could ripple throughout and affect the
working people and the average family, and we were not going to let
that happen," said President Bush.
Democratic presidential
nominee Barack Obama says he supports the efforts of the Bush
administration's Treasury Secretary, Henry Paulson, and Federal Reserve
Chairman, Ben Bernanke, to solve the crisis. In his party's radio
address, Obama urged the administration and Congress to follow basic
economic principles to restore prosperity to all Americans.
"We
need to help people cope with rising gas [gasoline] and food prices,
spark job creation by repairing our schools and our roads, help states
avoid painful budget cuts and tax increases, and help homeowners stay
in their homes," he said.
Obama also said the bailout should not favor any particular financial institution or officer.
"And
we must also ensure that the solution we design does not reward
particular companies or irresponsible borrowers or lenders or CEO's
[corporate chief executive officers], some of whom helped cause this
mess," he said.
Democrats want the rescue plan to include
mortgage help to let struggling homeowners avoid foreclosures. They
are also discussing attaching more middle-class assistance to the
legislation, even though President Bush has asked lawmakers to avoid
adding controversial items that could delay action.
Relieved
investors sent stocks soaring on Wall Street and around the world
Friday, after the plan was announced. The Dow Jones industrial average
gained more than three percent (368 points) on Friday.
Also, a
bankruptcy judge in New York decided Saturday that Lehman Brothers can
sell its investment banking and trading businesses to the British bank
Barclays. America's fourth largest investment bank filed the biggest
bankruptcy in U.S. history on Monday, after Barclays declined to buy
the entire company.
