Paulson urges 'clean and quick' OK
Treasury Secretary calls on Congress to move fast to approve bill that would let Treasury spend as much as $700 billion to buy troubled mortgage-related assets.
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September 21, 2008: 10:34 AM EDT
AMERICA'S MONEY CRISIS
Paulson urges 'clean and quick' OK
Treasury's bailout proposal
Bush wants OK to spend $700B
Judge OKs Lehman unit sale to Barclays
Big bailout: Where things stand
Bailout constrains next president
More Videos
A $700 billion lifeline
More Videos
Quick Vote
How would you rate the government's response this week to the credit crisis?
Appropriate
Not doing enough
Overreacting
or View results
NEW YORK (CNNMoney.com) -- Treasury Secretary Henry Paulson on Sunday called on Congress to move swiftly on the Bush administration's $700 billion proposal to bail out the financial system
"We need this to be clean and quick," Paulson said on ABC's "This Week."
President Bush asked Congress on Saturday for the authority to spend as much as $700 billion to purchase troubled mortgage assets and contain the financial crisis.
The legislative proposal is the centerpiece of what would be the most sweeping economic intervention by the government since the Great Depression. (Read the text here.)
Paulson, Federal Reserve Chairman Ben Bernanke and other officials have said in recent days that the lack of easy credit between banks and other financial institutions threatens to inflict serious damage on the economy if not addressed immediately.
The plan would allow the Treasury to buy up mortgage-related assets. The aim is for the government to buy the securities at a discount, hold onto them and then sell them for a profit.
"What we're doing is first stabilizing the market," Paulson said Sunday. "Once we stabilize the market, we need to ask ourselves how did we get here and how do we avoid getting here again."
"We need a lot of reforms, and this is going to be something Congress and the next administration are going to be working on for some time," Paulson added.
Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, agreed with Paulson that speedy passage of the bill was necessary.
"We need to do it quickly," Dodd said on "This Week." "We need to give the secretary the authority to work."
House Minority Leader John Boehner, R-Ohio, said Sunday that fellow lawmakers should not try to load up the bill with amendments. "This is not a time for people to be playing games - we need to keep it clean and simple."
Your comments on the bailout
Experts liken the Treasury's plan to the Home Owners' Loan Corp., put in place in 1933 to stem foreclosures and help refinance defaulting mortgages and boost banks' liquidity.
The mortgage plan is part of an extraordinary effort by the federal government to contain a financial crisis that has forced a major realignment on Wall Street and has started rippling out to Main Street.
In the past week, two of the nation's most venerable investment banks - Lehman Brothers (LEH, Fortune 500) and Merrill Lynch (MER, Fortune 500) - have fallen and the Federal Reserve was forced to lend $85 billion to prevent the sudden collapse of insurance giant American International Group (AIG, Fortune 500).
Meanwhile, mainstay financial institutions are scrambling to raise cash and shore up their books as lending has frozen up and investor confidence has sunk.
"You can't describe how ugly it would look if we don't act," Boehner said.
The administration's proposal also requests that Congress authorize an increase to the nation's debt ceiling. Currently, it's set to rise to $10.6 trillion for fiscal year 2009 - which runs from October 2008 through September 2009. But the proposal requests that limit be increased to $11.315 trillion to allow for the purchases of mortgage-backed assets.
The debt limit is a ceiling on how much debt the federal government is allowed to take on. Budget experts say it acts as a break on spending mostly because of political pressure, because lawmakers don't like to vote to raise it. Lawmakers are free to change it if they have reason, however.
The jury is still out on whether the proposal will fix the financial crisis, although experts are cautiously optimistic the plan will help the housing crisis. It will help banks shore up their balance sheets by removing hard-to-value assets. This would address the seemingly endless rounds of writedowns and capital raising that have been rocking the financial sector.
Without these bad loans weighing on their books, banks may be more willing to lend. Or at least that's the goal.
The problem is that the bailout will not automatically make banks profitable, nor can it immediately stop the slide in home values that is wreaking havoc on the economy.
Key lawmakers and their staffers are in talks about the proposal with Treasury staff. Although they've said they don't want the negotiations to turn the bill into a "Christmas tree" of provisions, Democrats are concerned that there be measures included to protect taxpayers and help homeowners directly.
In a statement Saturday, Sen. Charles Schumer, D-N.Y., co-chairman of the Joint Economic Committee, called the proposal "a good foundation ... that can stabilize markets quickly."
"But it includes no visible protection for taxpayers or homeowners," Schumer said. "We look forward to talking to Treasury to see what, if anything, they have in mind in these two areas."
Treasury Secretary calls on Congress to move fast to approve bill that would let Treasury spend as much as $700 billion to buy troubled mortgage-related assets.
EMAIL | PRINT | SHARE | RSS
September 21, 2008: 10:34 AM EDT
AMERICA'S MONEY CRISIS
Paulson urges 'clean and quick' OK
Treasury's bailout proposal
Bush wants OK to spend $700B
Judge OKs Lehman unit sale to Barclays
Big bailout: Where things stand
Bailout constrains next president
More Videos
A $700 billion lifeline
More Videos
Quick Vote
How would you rate the government's response this week to the credit crisis?
Appropriate
Not doing enough
Overreacting
or View results
NEW YORK (CNNMoney.com) -- Treasury Secretary Henry Paulson on Sunday called on Congress to move swiftly on the Bush administration's $700 billion proposal to bail out the financial system
"We need this to be clean and quick," Paulson said on ABC's "This Week."
President Bush asked Congress on Saturday for the authority to spend as much as $700 billion to purchase troubled mortgage assets and contain the financial crisis.
The legislative proposal is the centerpiece of what would be the most sweeping economic intervention by the government since the Great Depression. (Read the text here.)
Paulson, Federal Reserve Chairman Ben Bernanke and other officials have said in recent days that the lack of easy credit between banks and other financial institutions threatens to inflict serious damage on the economy if not addressed immediately.
The plan would allow the Treasury to buy up mortgage-related assets. The aim is for the government to buy the securities at a discount, hold onto them and then sell them for a profit.
"What we're doing is first stabilizing the market," Paulson said Sunday. "Once we stabilize the market, we need to ask ourselves how did we get here and how do we avoid getting here again."
"We need a lot of reforms, and this is going to be something Congress and the next administration are going to be working on for some time," Paulson added.
Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, agreed with Paulson that speedy passage of the bill was necessary.
"We need to do it quickly," Dodd said on "This Week." "We need to give the secretary the authority to work."
House Minority Leader John Boehner, R-Ohio, said Sunday that fellow lawmakers should not try to load up the bill with amendments. "This is not a time for people to be playing games - we need to keep it clean and simple."
Your comments on the bailout
Experts liken the Treasury's plan to the Home Owners' Loan Corp., put in place in 1933 to stem foreclosures and help refinance defaulting mortgages and boost banks' liquidity.
The mortgage plan is part of an extraordinary effort by the federal government to contain a financial crisis that has forced a major realignment on Wall Street and has started rippling out to Main Street.
In the past week, two of the nation's most venerable investment banks - Lehman Brothers (LEH, Fortune 500) and Merrill Lynch (MER, Fortune 500) - have fallen and the Federal Reserve was forced to lend $85 billion to prevent the sudden collapse of insurance giant American International Group (AIG, Fortune 500).
Meanwhile, mainstay financial institutions are scrambling to raise cash and shore up their books as lending has frozen up and investor confidence has sunk.
"You can't describe how ugly it would look if we don't act," Boehner said.
The administration's proposal also requests that Congress authorize an increase to the nation's debt ceiling. Currently, it's set to rise to $10.6 trillion for fiscal year 2009 - which runs from October 2008 through September 2009. But the proposal requests that limit be increased to $11.315 trillion to allow for the purchases of mortgage-backed assets.
The debt limit is a ceiling on how much debt the federal government is allowed to take on. Budget experts say it acts as a break on spending mostly because of political pressure, because lawmakers don't like to vote to raise it. Lawmakers are free to change it if they have reason, however.
The jury is still out on whether the proposal will fix the financial crisis, although experts are cautiously optimistic the plan will help the housing crisis. It will help banks shore up their balance sheets by removing hard-to-value assets. This would address the seemingly endless rounds of writedowns and capital raising that have been rocking the financial sector.
Without these bad loans weighing on their books, banks may be more willing to lend. Or at least that's the goal.
The problem is that the bailout will not automatically make banks profitable, nor can it immediately stop the slide in home values that is wreaking havoc on the economy.
Key lawmakers and their staffers are in talks about the proposal with Treasury staff. Although they've said they don't want the negotiations to turn the bill into a "Christmas tree" of provisions, Democrats are concerned that there be measures included to protect taxpayers and help homeowners directly.
In a statement Saturday, Sen. Charles Schumer, D-N.Y., co-chairman of the Joint Economic Committee, called the proposal "a good foundation ... that can stabilize markets quickly."
"But it includes no visible protection for taxpayers or homeowners," Schumer said. "We look forward to talking to Treasury to see what, if anything, they have in mind in these two areas."