$700 billion proposal in bailout plan
The Bush administration Sunday said that Congress must act quickly to approve the $700 billion proposal to rescue financial institutions, reported The Associated Press.
The proposal would buy bad mortgage debt in order to unfreeze the U.S. credit markets.
Congressional leaders endorsed much of the proposal while saying that the proposal should be expanded to help those on Main Street as well as Wall Street financial firms who have lost billions in bad investments. However, the proposal is expected to pass within the next few days.
During the greatest loss on Wall Street since the Great Depression, the U.S. government has taken over the country's two biggest mortgage companies, Fannie Mae and Freddie Mac, and the biggest insurance company, American International Group Inc.
The recent proposal may cost $1 trillion, the plan would take $700 billion of the bad loans off of the books of financial firms, allowing companies to resume normal lending operations.
Treasury Secretary Henry Paulson said that there was no alternative plan of action for the federal government and that he believes other major countries will take similar actions to protect their financial systems.
NPR reported, "The department also asked Congress to raise the national debt ceiling to $11.3 trillion from $10.6 trillion to cover the plan."