Bush Seeks Broader Power For Bank Crisis

White House Wants To Buy Distressed Assets From Banks In Danger Of Failing; Needs Congress' OK

(CBS/AP)  The Bush administration asked lawmakers Thursday for the power to rescue banks by buying distressed assets that lie at the heart of the financial system's crisis.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke briefed lawmakers on the plan they are crafting.

Democratic Senate Majority Leader Harry Reid said he expected the administration and the Fed to have a proposal to lawmakers in a matter of hours, rather than days.

Paulson, Bernanke and Securities and Exchange Commission chair Christopher Cox asked lawmakers at the session to act swiftly in passing legislation.

"It will be the power - it may not be a new entity - it will be the power to buy up illiquid assets," Rep. Barney Frank said.

"There is this concern that if you had to wait to set up an entity, it could take too long," Frank said.

Frank said there was "virtually unanimous agreement" among lawmakers in attendance of the need for such action and that the House Financial Services Committee, which he chairs, could have a legislative drafting session on a proposal as early as Wednesday

One of the measures believed to be considered is creating something similar to the Resolution Trust Corp., which the government used in the 1980s to bail out the troubled savings and loans by buying up all their bad debt, reports CBS News business correspondent Anthony Mason. But critics say that crisis is different.

"The paper, the financial paper, sold then was not as damaged in its reputation as the subprime paper is today," Michael Greenberger, of the University of Maryland School of Law, told CBS News.

Meanwhile, the financial crisis continues to deepen, reports Mason. Wachovia reportedly is in talks to merge with Morgan Stanley and Washington Mutual is in desperate search for a buyer. And the credit markets have frozen as banks have become reluctant to lend even to each other.

"No one trusts anybody anymore," Paul McCulley, managing director of Pimco told CBS News. "They still do trust Uncle Sam. Mr. Paulson and Mr. Bernanke need to put Uncle Sam's money on the line to restore trust."

Stocks rallied more than 400 points late Thursday after a report that the Bush administration was working on a new plan to alleviate fallout from the housing and credit crises. Those debacles have badly bruised the economy and pushed unemployment to a five-year high.

"What we are working on now is an approach to deal with the systemic risk and the stresses in our capital markets," Paulson said.

"The root cause of the stress in the capital markets is the real estate correction," he added.

Bernanke said he looked forward to working closely with Congress to "resolve this financial crisis and get our economy moving again."

President George W. Bush canceled an out-of-town trip Thursday to stay in Washington and meet for 40 minutes with Bernanke, Paulson and Cox, along with White House and Treasury Department aides.

Rep. Nancy Pelosi said any potential action must protect taxpayers who are already on the hook for potentially billions of dollars in bailouts to financial firms taken down by the financial crisis.

Once Congress gets the administration's proposal, Pelosi said: "We hope to move very quickly. Time is of the essence."

Pelosi wrote to Bush on Thursday saying Congress would meet beyond its planned Sept. 26 adjournment, if necessary, "to consider legislative proposals and conduct necessary investigations" related to the financial crisis.

Administration officials said it was critical that Congress act next week, according to sources familiar with the meeting, who spoke on condition of anonymity because it was private.

Frank suggested Democrats might try to tie the authority to additional steps to help struggling borrowers keep their homes.

Republican leaders said any attempt to use the administration's request for leverage on other priorities would be inappropriate.

"Now is not the time to seek political leverage or a quid pro quo," said Reps. John A. Boehner of Ohio and Roy Blunt of Missouri, the top two House Republicans, in a statement.

[hsinco-2009]

I would not give Bu$h power to flush the dang toilet!

[lemonskink]

Wasn''t a Bush involved in the Savings and Loan scandal they are talking about in this story?

[kissamaarse]

George Bush and John McCain (Keating 5) and Phil Gramm, Mccain''s financial adviser, who deregulated for this financial meltdown and attempted destruction of the American economy, ARE the problem.

May Republican politicians be banished to the desert (on a distant planet) for 1,000 years to atone for their sins against humanity, and for their r-ape of the American and global economy.

[ubrew12]

This''ll play havoc with the value of the dollar: hence, expect to pay more for gasoline, clothing, food, etc.

Thanks to the Reagan and Bush tax cuts, the government doesn''t have any money. People are already dumping dollars to get out of the Bush mess and now the government is going to go further in debt to bail out Wall Street?

[smirk5]

Bin Laden''s goal is to bankrupt the U.S. I''m sure he''s considering making Bush and his buddies honorary Al-Qaeda members this very moment.

[txpatriot4us]

The Federal Government has no business buying up properties to benefit investors and their pals on Wall Street. So where is this MONEY supposed to come from George? You have us now 4 Trillion Dollars Deeper in Debt than when you crooks took office!

[txpatriot4us]

Wasn''''t a Bush involved in the Savings and Loan scandal they are talking about in this story?
Posted by lemonskink
------------------------------------------------------
Yes indeed that was Neil Bush and friends!

[txpatriot4us]

Reove the " L" in Palin what do you have?

PAIN !

[pensacola98]

The only way I would agree to support this is with a condition that outlaws political lobbying by anyone from the banking, securities, credit, mortgage, lending, investment, real estate, and property & casual industry in all levels of Federal and State government.

Lobbyists from the industries mentioned above clearly need to be disarmed and stopped from influencing anyone in all State and Federal Executive, Legislative and Judicial Branch about policy.

[gwjackie]

Bush does not need any more power! What we need to do is check the books before anyone gets a dam dime and just see how many we can put in jail for life. This is just plain bullshi! the Republican party including John MC Cain that give a free hand to these people this is like the coverup on the Keeting 5.

[pensacola98]

If the President wants the power, he must give something in return. I want to outlaw State and Federal lobbying from those industries that may benefit by the broadened powers of the president if given the power to rescue banks or distressed assets.

[reef133]

What ever happened to ''Power'' to the People?

Help me out and:

Count down the end of the ''W''orst presidency EVER!

[lucasnico]

Bush: "see you guys later, I''m going on a trip!"

Aide: "Ahhhh, Mr. President, we are in economic crisis....when the depression was going on, FDR would go on the radio and talk to the American people about what was going on......"

Bush: "Hey, good idea...........what should I say??"

a true leader!

[cdfoxtrot3]

Bush knows the Republicans are not going to win the election so, he is going to strap Obama with as much hardship as possible and help out his wealthy friends in the process. It''''s win-win for Bush and the Republicans.

Posted by Sky_Five

Exactly.

Bush and the Republicans will do ANYTHING to help their rich friends. I love the use of code words: "distressed assets" sounds nice and innocent, but it''s code for "bad debts". Bush wants taxpayers to pay for bad decisions on Wall Street. Shame on Bush and shame on the Republicans. This is about as un-conservative and irresponsible a position as he could take.

[lanawonders]

If President Bush now knows the solution to the Bank Crisis........Why didn''t he say something sooner!!!

[billpl-2009]

"Bush Seeks Broader Power For Bank Crisis"



........no

[hoomyaj]

All the Wall Street firms could go to hell for all I care. No one gave me a cent to help me pay my bills. The rich gets billions and McSane wants to give them more. Of course, these guys are his friends... duh. My tax dollars are being wasted on Wall Street bailouts and this dumb war in Iraq. So much for the conservative values of small gov''t and low spending.

[shanev137]

the RTC....hahahaha

I had been predicting it all along and nailed it.

Pretty soon the The Fed will be selling houses again for pennies on the dollar, just like in the late 80''s.

YeeHaw!!

[harp1963]

The last thing we want to do is give the dumbest President in U.S. history broader power.

[mikemo1947]

TIME FOR ACTION. Everyone write their representative and senators to say it is time both parties worked together to find the right combination to stabilize our economy. We the voters will fire any incumbents that use partisanship or grandstanding to delay getting a bill through. If the parties fail to pass a bill by end of September, then we will fire incumbents of both parties. Also, write both presidential candidates to tell them to get back to Congress and demonstrate how you can bring together both parties in Congress to accomplish something good for the whole nation. If you don%u2019t go back and show your leadership, then we assume our nation%u2019s crisis is not important to you or you were bluffing and do not know how to bring the parties together. SPREAD THE MESSAGE TO ALL BLOGS AND LET THE CANDIDATES KNOW WE ARE TIRED OF PROMISES AND WANT SOME ACTION. http://www.congress.org/congressorg/home/

[nearl4511]

I feel my personal portion of the deficit rising geometrically.

I really don''t know what to make of this. It smells of shear panic.

[yongamerica]

The Bush administration asked lawmakers Thursday for the power to rescue banks by buying distressed assets...

Translation: Bush wants to "buy" the banks bad debts. Does this mean his enforcers are then going to start paying visits and break a few bones?

No, he wants the average tax payer, the one who has a hard time buying gas and putting a decent dinner on the table to pay them off.

Perhaps those Executives should return all those multimillion dollar bonuses they received in the last 5 years to their companies.

[shanev137]

It''s almost like Bush loves *** over McCain.

McCain is such a Bush lackey and whipping boy, he''ll take anything Bush throws at him.

Bush could say myturds smell like roses and McCain would have to agree with him.

[stn_sage]

My OPINION: NO! NO! NO! NO! NO!

Bush and this administration haven''t gotten so much as ONE thing correct in nearly eight (8) years!

With that kind of a track record, it doesn''t take a Rhodes Scholar to figure out these people can''t be trusted to come up with a reasonable solution!

They are the picture next to the word ''failure'', in the dictionary!

If Democrats let them do this, they can forget about gaining any seats in Congress, because there WILL be BACKLASH and plenty of it! And, that''s what Bush & co. are really after, to bring the Dems down with them!

[pirmin3]

Bail out his buddies so they keep their bonuses and have the tax payers foot the bill. A very GOP approach and the brain dead voters are too stupid to do anything about it. Bend over again for Bush.

[amercanbiker]

For the love of God people! Why can''t you just give Bush more power?

He promises not to abuse it.

[bjudy1]

I think the government''s(both sides) calculation now is how much of our money can they commit before people take to the streets. This is Bush''s last(and biggest) money grab before he leaves office.

[nearl4511]

So the idea is that if businesses made poor choices, because we let them, then we assume the bad debt that their decisions reaped, but they can keep the "good" other portions to stay afloat?

Very Enronish. Publish good earnings (marked on speculation); hide debt in other"bad" entities.

Then claim the government is bad and only private firms know how to really screw everyone including themselves over!!

[arthurcl1]

I have said it for the last 4 years. Emperor Bush must go! First he goes over the U.N. to go into Iraq and act like his Emperor powers to doom us there. And now he is doing it again to overpower everyone to get his way to bail out his GOP buddies either Oil or Banks. Enough! Let the Banks go down! The little guys like us are in debt up to our ears enough and if you are late on your Mortgage or Credit Card we do not get anyone to bail us out. Now we have to pay more tax debt to bail them and Bush out? Another GOP Mess. Bush must Go to you know where.....

[nearl4511]

Republicans are worried about Democrats making political Hay.......when the KING of deregulation Phil Gramm is the campaign manager for the Republican candidate!?!?!?

[babooph]

What now-repo all the middle class homes & sell them quick to China & give the money to the corps. & rich ??Or is this already going on-the propaganda system will put a nice front on it.

[nearl4511]

OK Iv''e decided. Write your Congress Person. Don''t let this baboon have any more power. Make him follow the "GD peice of paper" he has sworn to uphold.

[kissamaarse]

Suddenly Bush. McCain, Phil Gramm and the Republican engineers of this financial crisis they have created want to borrow yet more money and straddle the American tax payers far beyond the 100 years of debt we already owe for their Iraq? Let''s take their anti-American personal wealth first, that they have sucked off of America, and then let''s see what is still owed.

[brianbwb-2009]

"Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke briefed lawmakers on the plan they are crafting."

More corporate welfare. The lenders should not be reimbursed for over inflated property prices, as it will only encourage more speculators to invest in real estate, mark up the price, sucker some shmoe into an adjustable rate shark loan, claim losses when the shmoe defaults because the monthly mortgage payment doubles or triples. They will then claim losses, and translate this fictitious loss into cash, which taxpayers will be forced to pay.

Price control was the method of choice for GOP president Nixon.

Bush is just advocating more of the failed "trickle down", and it will create an even bigger problem down the road when the bill for Iraq and Afghanistan comes due. The Fed will print more devalued money, with increased debt attached, and the problem grows bigger than the US economy can bear.

Then "Pop!, goes the weasel"...

Be warned.

[samthetvcat]

---"Frank said there was "virtually unanimous agreement" among lawmakers in attendance of the need for such action"---

I just feel like eating sour candies and watching reality tv as like a soothing mechanism rather than try and think about what this might mean in terms of a growing debt.

It seems like everybody is totally for this, so it must be the necessary and the best course of action, right? I choose to believe that . . .

[arrestbush1]

"The entire economy is too complex and its going to fail at some point, pumping more tax dollars is just delaying the inevitable. Rice said Russia is becoming an isolated country, funny we are the ones bordered by 2 oceans."

What''s scary is I don''t think it''s a coincidence the country that happens to be bordered by two oceans happens to be failing. I think the USA was designed as a slave matrix world by secret groups in the middle east for one reason only which is for americans to be the real working slaves in this world while people in countries like the Netherlands, Holland, Finland, Germany etc can live the good life in the REAL land of the free where there is perfectly paved roads and little or no pollution.

[brianbwb-2009]

To all the neocons who like to try the "tax and spend" label for the progressives, now try to explain what in your neocon view is going to pay for your hero''s scheme, from where will Bush''s successor get the money to pay for this blatant example of "borrow and spend"?

Oh yeah, I forget, Bush won''t care, he will be on his ranch in Bolivia, shooting Campesinos who dare step foot on the land being stolen from them.

[arrestbush1]

I was shopping online for a computer case. A company called "CoolerMaster". When I went to their website, it asks what region you are from. Europe, Asia, Australia and for America, it says "New North America". What the heck is that supposed to be?? I was on this same site about a year ago and that wasn''t there.

[brianbwb-2009]

Posted by SamTheTVCat

Don''t let them have it so easily Sam, while we all know that something must be done, we also know that anything they come up with will be designed with the same "trickle down" failed BS, that won''t even buy that much more time, and will make the finak reckoning that much more expensive, and the crash that much more devastating.

Buy the bad debt? That is like paying off the loan sharks for money they actually shouldn''t be entitled to.

I say let the greediest lenders and speculators fail, get the property at auction for pennies on the dollar, then re-write the mortgages for those who haven''t lost their homes yet, and for the working homeless, at a rate just above the auction price, enough to pay for the administration.

[merlgrey]

let them eat cake.

[rudy654-2009]

I don''t care what happens to these institutions. They all paid off congressman to bully the consumer earlier on. When Enron was screeewing California, Bush said he wasn''t going to do one bloody thing about it. So, turn about is fair play. Let them suffer.

[samthetvcat]

---"Don''t let them have it so easily Sam"---
Posted by brianbwb

Keep up the good fight :)

I''m gonna go have a Little Debbie snack cake :)

[omded]

Whenever a politician says anything about "the Government buying up" something, what they''re really saying is "the American taxpayers will "buy up" something. Welcome fellow taxpayers to the big money hole! You and I will be obligated by our elected representatives to buy up a lot of bad debts so the careless, irresponsible banks can walk away completely free. Don''t you just love it when your good old Uncle Sam takes your money and throws it into some idiot''s money hole? Let the banks and the politicians drink down their own untasty medicine! As Kelly Bundy (Married With Children) once said, "you wet your bed, now you have to lay in it!"

[justme1954-2009]

Everyone keeps stating it is the real estate that has brought us to this crisis. Why am I not hearing the truth? It was the mortgage industry that has did this to us and I predicted this in 2001 when the interest only loans were the fad! Did anyone listen to me? Of course not, I am a peon. As much as I admired Greenspan, I can not believe he did not put out warnings back then. Fannie Mae and Freddie Mac did not create this, it was greedy mortgage companies and lenders who felt that if they did not give what the mortgage companies wanted, they would lose business.

[justme1954-2009]

Everyone keeps stating it is the real estate that has brought us to this crisis. Why am I not hearing the truth? It was the mortgage industry that has did this to us and I predicted this in 2001 when the interest only loans were the fad! Did anyone listen to me? Of course not, I am a peon. As much as I admired Greenspan, I can not believe he did not put out warnings back then. Fannie Mae and Freddie Mac did not create this, it was greedy mortgage companies and lenders who felt that if they did not give what the mortgage companies wanted, they would lose business.

[justme1954-2009]

Do you really what to know the truth? What do you mean that your publish button has been disable?

[rushliberal]

Yes - Bush wants more POWERS for his last 5 months in office so that he can finally F**K UP America once and FOR ALL.

[toby2957]

"The Bush administration asked lawmakers Thursday for the power to rescue banks by buying distressed assets"

More power. More corporate welfare. More corruption.

The solution? Less republicans.

OBAMA BIDEN 2008!!

[cjs_cnet_xyz]

This financial fiasco is just a Ponzi scheme orchestrated by the wealthy to steal middle class home equity with the support and negligence of the current republican administration. Let''s raise taxation of homes with 10000sq feet or more by 200%. If middle class homes should be so hard to keep, perhaps this hardship should be shared with the wealthy.

[erasmus81]

"Ahmadinejad wanted to call it "Y''''all are in deep shi''''ite" but he was overruled by China."

Posted by tuckerndfw at 02:23 AM : Sep 19, 2008


You''re pretty d*mn cute, aren''t ya tucker?