Trying to allay public fears about the health of the economy and people's pocketbooks, Bush said that the risk of doing nothing far outweighed the risks of government intervention.
"People are beginning to doubt our system, people were losing confidence and I understand it's important to have confidence in our financial system," he said. Over time taxpayers will "get a lot of the money back," he said.
The president, speaking to reporters after a meeting with Colombian President Alvaro Uribe, said his first instinct was not to lay out a huge government plan. Bush said that after his top economic advisers told him that the financial problems were so significant and widespread, he decided to take bold action.
"In my judgment, based upon the advice of a lot of people who know how markets work, this problem wasn't going to be contained to just the financial community," the president said.
According to a draft of the proposal obtained by The Associated Press, the Bush administration is asking Congress to let the government buy $700 billion in bad mortgages. The plan would give the government broad power to buy the bad debt of any U.S. financial institution for the next two years. It would raise the statutory limit on the national debt from $10.6 trillion to $11.3 trillion to make room for the massive rescue. The proposal does not specify what the government would get in return from financial companies for the federal assistance.
Administration officials and members of Congress were to
negotiate throughout the weekend. The plan is designed to let
faltering financial institutions unload their bad debt on the
government, and in turn the taxpayer, in a bid to avoid dire
economic consequences.The White House and congressional leaders
hoped the developing legislation could pass as early as next week.
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