The latest attempt to jump-start the credit system appears to have worked. With the DOW catapulting into 400 point territory during opening minutes in response to what has been called the mother of all bailouts.
"Government intervention is not only warranted, it is essential," said President Bush.
In an effort to break out from what is perhaps the worst credit crisis since the great depression, the government is considering the creation of an agency that would buy up all the bad loans currently dragging the financial system down.
"Until we get stability in housing market we will not get stability in the financial market. We have worked with congress on a number of the steps, all of which were important leading up to this. But this is the way to stabilize the system and get at the root cause," said Treasury Secretary Henry Paulson.
Part of the government's multi-prong approach is to get rid of the bad loans in the financial system and increase money to the mortgage system.
While this comprehensive plan sent the market into a feeding frenzy, taxpayers will be picking a very hefty bill. "I believe we're talking about $1-trillion dollars," said Senator Richard Shelby (R) Alabama.
Paulson called it cheaper than the alternative. "I am convinced this bold approach will cost American families far less than the alternative: a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion."
The Treasury Department is expected to work on a legislative plan over the weekend and ask congress to take action next week. In the meantime, the secretary has temporarily banned the practice of betting against company stocks to give investment houses some breathing room.
