ID :
20517
Mon, 09/22/2008 - 11:01
Auther :
Shortlink :
http://m.oananews.org//node/20517
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(LEAD) Paulson urges Congress to rapidly approve $700 bln rescue plan
(ATTN: UPDATES with more details, background throughout)
By Hwang Doo-hyong
WASHINGTON, Sept. 21 (Yonhap) -- U.S. Treasury Secretary Henry Paulson Sunday urged Congress to quickly approve a huge bailout package for financial institutions struggling with illiquid assets from falling housing prices.
Paulson told NBC's Meet the Press, "We need to deal with this and deal with it
quickly," fearing the US$700 billion rescue plan might not be cleared in time by
Congress, which adjourns Friday as lawmakers return to the campaign trail for the
Nov. 4 elections.
Democrats have said they will inject several provisions into the package
presented by the Bush administration on Saturday to limit the administration's
power to purchase mortgage-based securities, protect homeowners from foreclosures
and restrict salaries and other benefits for executives of financial firms.
"It is only appropriate to expect those institutions that benefit to help protect
American homeowners and the American economy," Democratic presidential nominee
Barack Obama said in a statement. "We cannot underwrite continued
irresponsibility, where CEOs cash in and our regulators look the other way. We
cannot abet and reward the unconscionable practices that triggered this crisis."
The unprecedented package calls for legislation to expand the legal debt limit of
the U.S. government to $11.3 trillion from $10.6 trillion amid fears over the
burgeoning U.S. trade and fiscal deficits undermining the credibility of the
world's biggest economy.
The cost of the package, which surpasses the $600 billion Congress has
appropriated for the war in Iraq since 2003, follows the decision by the federal
government to put up to $200 billion into the failing mortgage giants Fannie Mae
and Freddie Mac, and $85 billion into the world's biggest insurer, American
International Group, at the cost of market principles, taxpayers' money and moral
hazard.
Defending the package, President George W. Bush said Saturday, "This is a big
package because it was a big problem," hoping the government can recoup "a lot of
money" once the financial market is stabilized and the bad assets are resold at a
profit.
Speaking to reporters at the White House along with Colombian President Alvaro
Uribe, Bush also said the bailout package will prevent the current financial
turmoil from spilling over to the overall economy. "This problem wasn't going to
be contained to just the financial community," he said.
The Federal Reserve on Wednesday announced a concerted measure by the central
banks of five major economies to pour up to US$180 billion into the global
financial market.
Earlier in the month, Lehman Brothers, the fourth-biggest investment bank in the
U.S., filed for bankruptcy and Merrill Lynch, the world's biggest brokerage firm,
was sold to Bank of America for $50 billion. Bear Stearns collapsed earlier in
the year.
Goldman Sachs and Morgan Stanley, two surviving major investment banks, are said
to be under discussions for possible mergers with other financial institutions.
Critics say the biggest government intervention since the Great Depression will
not solve the problem caused by the "asset bubble" unless falling housing prices
stop the downward trend.
Obama, who benefited from the ongoing financial turmoil after briefly faltering
after the announcement of the Republican vice presidential nominee, Sarah Palin,
said the Bush administration "has only offered a concept with a staggering price
tag, not a plan."
Obama said he would not allow a "blank check" to be written, calling for
"independent accountability and oversight" of the Treasury Department.
Denouncing the Bush administration's deregulations, which are blamed partly for
the financial crisis, the Illinois Senator said, "Even if the Treasury recovers
some or most of its investment over time, this initial outlay of up to $700
billion is sobering, and in return for their support, the American people must be
assured that the deal reflects some basic principles."
However, the Bush administration insists the package will help revive the
financial system, which is crippled by the mortgage crisis, as well as eventually
boost the housing market.
In a statement released on its Web site late Saturday, the Treasury Department
said, "The program aims to "fundamentally and comprehensively address the root
cause of our financial system's stresses by removing distressed assets from the
financial system ... When the financial system works as it should, money and
capital flow to and from households and businesses to pay for home loans, school
loans and investments that create jobs."
The program allows the federal government to purchase up to $700 billion worth of
"residential and commercial mortgage-related assets, which may include
mortgage-backed securities and whole loans," with the purchase authority expiring
two years from the date of enactment.
The delinquency rate for commercial mortgages also surged sharply in recent
months, causing some bank failures.
Paulson is also authorized to have the discretion "in consultation with the
Chairman of the Federal Reserve, to purchase other assets, as deemed necessary to
effectively stabilize financial markets."
Assets must have been issued on or before Sept. 17, 2008 to qualify for the
program, and the price of asset purchases will be established through reverse
auctions or any other market mechanisms, according to the statement.
Foreign financial institutions that have significant operations in the U.S. will
also be eligible for the program in consideration of the densely intertwined
global financial system, it said.
Appearing on ABC's "This Week", Paulson urged foreign governments to follow suit.
"We are talking very aggressively with other countries around the world and
encouraging them to do similar things and I believe a number of them will," he
said. "If a financial institution has business operations in the United States,
hires people in the United States, if they are clogged with illiquid assets, they
have the same impact on the American people as any other institution."
hdh@yna.co.kr
(END)
By Hwang Doo-hyong
WASHINGTON, Sept. 21 (Yonhap) -- U.S. Treasury Secretary Henry Paulson Sunday urged Congress to quickly approve a huge bailout package for financial institutions struggling with illiquid assets from falling housing prices.
Paulson told NBC's Meet the Press, "We need to deal with this and deal with it
quickly," fearing the US$700 billion rescue plan might not be cleared in time by
Congress, which adjourns Friday as lawmakers return to the campaign trail for the
Nov. 4 elections.
Democrats have said they will inject several provisions into the package
presented by the Bush administration on Saturday to limit the administration's
power to purchase mortgage-based securities, protect homeowners from foreclosures
and restrict salaries and other benefits for executives of financial firms.
"It is only appropriate to expect those institutions that benefit to help protect
American homeowners and the American economy," Democratic presidential nominee
Barack Obama said in a statement. "We cannot underwrite continued
irresponsibility, where CEOs cash in and our regulators look the other way. We
cannot abet and reward the unconscionable practices that triggered this crisis."
The unprecedented package calls for legislation to expand the legal debt limit of
the U.S. government to $11.3 trillion from $10.6 trillion amid fears over the
burgeoning U.S. trade and fiscal deficits undermining the credibility of the
world's biggest economy.
The cost of the package, which surpasses the $600 billion Congress has
appropriated for the war in Iraq since 2003, follows the decision by the federal
government to put up to $200 billion into the failing mortgage giants Fannie Mae
and Freddie Mac, and $85 billion into the world's biggest insurer, American
International Group, at the cost of market principles, taxpayers' money and moral
hazard.
Defending the package, President George W. Bush said Saturday, "This is a big
package because it was a big problem," hoping the government can recoup "a lot of
money" once the financial market is stabilized and the bad assets are resold at a
profit.
Speaking to reporters at the White House along with Colombian President Alvaro
Uribe, Bush also said the bailout package will prevent the current financial
turmoil from spilling over to the overall economy. "This problem wasn't going to
be contained to just the financial community," he said.
The Federal Reserve on Wednesday announced a concerted measure by the central
banks of five major economies to pour up to US$180 billion into the global
financial market.
Earlier in the month, Lehman Brothers, the fourth-biggest investment bank in the
U.S., filed for bankruptcy and Merrill Lynch, the world's biggest brokerage firm,
was sold to Bank of America for $50 billion. Bear Stearns collapsed earlier in
the year.
Goldman Sachs and Morgan Stanley, two surviving major investment banks, are said
to be under discussions for possible mergers with other financial institutions.
Critics say the biggest government intervention since the Great Depression will
not solve the problem caused by the "asset bubble" unless falling housing prices
stop the downward trend.
Obama, who benefited from the ongoing financial turmoil after briefly faltering
after the announcement of the Republican vice presidential nominee, Sarah Palin,
said the Bush administration "has only offered a concept with a staggering price
tag, not a plan."
Obama said he would not allow a "blank check" to be written, calling for
"independent accountability and oversight" of the Treasury Department.
Denouncing the Bush administration's deregulations, which are blamed partly for
the financial crisis, the Illinois Senator said, "Even if the Treasury recovers
some or most of its investment over time, this initial outlay of up to $700
billion is sobering, and in return for their support, the American people must be
assured that the deal reflects some basic principles."
However, the Bush administration insists the package will help revive the
financial system, which is crippled by the mortgage crisis, as well as eventually
boost the housing market.
In a statement released on its Web site late Saturday, the Treasury Department
said, "The program aims to "fundamentally and comprehensively address the root
cause of our financial system's stresses by removing distressed assets from the
financial system ... When the financial system works as it should, money and
capital flow to and from households and businesses to pay for home loans, school
loans and investments that create jobs."
The program allows the federal government to purchase up to $700 billion worth of
"residential and commercial mortgage-related assets, which may include
mortgage-backed securities and whole loans," with the purchase authority expiring
two years from the date of enactment.
The delinquency rate for commercial mortgages also surged sharply in recent
months, causing some bank failures.
Paulson is also authorized to have the discretion "in consultation with the
Chairman of the Federal Reserve, to purchase other assets, as deemed necessary to
effectively stabilize financial markets."
Assets must have been issued on or before Sept. 17, 2008 to qualify for the
program, and the price of asset purchases will be established through reverse
auctions or any other market mechanisms, according to the statement.
Foreign financial institutions that have significant operations in the U.S. will
also be eligible for the program in consideration of the densely intertwined
global financial system, it said.
Appearing on ABC's "This Week", Paulson urged foreign governments to follow suit.
"We are talking very aggressively with other countries around the world and
encouraging them to do similar things and I believe a number of them will," he
said. "If a financial institution has business operations in the United States,
hires people in the United States, if they are clogged with illiquid assets, they
have the same impact on the American people as any other institution."
hdh@yna.co.kr
(END)
