Published: Sunday, September 21, 2008
Bush bailout plan swells to $700 billion
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Haraz Ghanbari / Associated Press
President Bush speaks at a news conference in the White House Rose Garden on Saturday.
WASHINGTON -- The Bush administration on Saturday raised the price tag on its emergency plan to revive the U.S. financial system, asking Congress for authority to spend up to $700 billion to relieve crippled financial institutions of their mortgage-based assets, a sum that would exceed the current cost of the Iraq war.
Congressional leaders responded positively to the administration's rescue plan, though the price tag was $200 billion higher than they had been told to expect just three days ago. But House Democrats said they would push to include a number of contentious provisions that could make it difficult to pass the plan quickly, including limits on executive compensation for firms that unload their bad assets on the government and new powers for bankruptcy judges to modify mortgages on primary residences.
"Obviously, this is of direct benefit to some people in the financial industry," said Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee. "We need to be talking about direct benefits to people who are not in the private sector."
President Bush urged Democrats to set aside those demands. In talks with congressional leaders, Bush said he "found a common understanding of how severe the problem is" and the need for urgent action. "We need to get this done quickly and, you know, the cleaner the better," he said.
Bush also defended the size of the request, saying drastic action was needed because of the magnitude of the financial crisis, a cataclysm that started with bad mortgage loans to U.S. homeowners, spread to the banking and financial services industry and now is enveloping markets around the world. "This is a big package because it's a big problem," Bush said.
Bush, who campaigned as the nation's first president with a master's in business administration and a free-market advocate, also appeared to address complaints from conservatives that the plan inserts the government too much into the economy.
"I'm sure there are some of my friends out there that are saying, 'I thought this guy was a market guy, what happened to him?' " Bush said. "My first instinct was to let the market work, until I realized, upon being briefed by the experts, how significant this problem became."
The proposal itself is just three pages long. But it lays out the most sweeping government intervention in the private sector since the Great Depression. In addition to $700 billion, the plan seeks vast new powers for the Treasury secretary to purchase mortgage-based assets from U.S.-based financial institutions over the next two years, to hire people to manage that portfolio and to issue regulations to stabilize the mortgage market as the secretary "deems necessary."
Congressional leaders responded positively to the administration's rescue plan, though the price tag was $200 billion higher than they had been told to expect just three days ago. But House Democrats said they would push to include a number of contentious provisions that could make it difficult to pass the plan quickly, including limits on executive compensation for firms that unload their bad assets on the government and new powers for bankruptcy judges to modify mortgages on primary residences.
"Obviously, this is of direct benefit to some people in the financial industry," said Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee. "We need to be talking about direct benefits to people who are not in the private sector."
President Bush urged Democrats to set aside those demands. In talks with congressional leaders, Bush said he "found a common understanding of how severe the problem is" and the need for urgent action. "We need to get this done quickly and, you know, the cleaner the better," he said.
Bush also defended the size of the request, saying drastic action was needed because of the magnitude of the financial crisis, a cataclysm that started with bad mortgage loans to U.S. homeowners, spread to the banking and financial services industry and now is enveloping markets around the world. "This is a big package because it's a big problem," Bush said.
Bush, who campaigned as the nation's first president with a master's in business administration and a free-market advocate, also appeared to address complaints from conservatives that the plan inserts the government too much into the economy.
"I'm sure there are some of my friends out there that are saying, 'I thought this guy was a market guy, what happened to him?' " Bush said. "My first instinct was to let the market work, until I realized, upon being briefed by the experts, how significant this problem became."
The proposal itself is just three pages long. But it lays out the most sweeping government intervention in the private sector since the Great Depression. In addition to $700 billion, the plan seeks vast new powers for the Treasury secretary to purchase mortgage-based assets from U.S.-based financial institutions over the next two years, to hire people to manage that portfolio and to issue regulations to stabilize the mortgage market as the secretary "deems necessary."
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