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.