Congress Debates $700B Financial Bailout

Over the weekend, U.S. Treasury Secretary Henry Paulson introduced the Bush Administration's $700 billion plan to stabilize Wall Street and rescue some of the country's largest financial institutions, and Democrats and Republicans in Congress are debating how best to move the proposal forward.

The "bailout" legislation proposed by the administration would allow the U.S. Treasury Department "to buy suspect U.S. mortgage loans from U.S. and foreign-owned banks, at a possible cost of as much a $700 billion," according to the Washington Post. Some members of Congress have proposed modifications to the plan -- including the possible inclusion of relief for homeowners, and limitations on compensation for company executives. In a statement delivered Monday to encourage Congress's swift action on the bailout legislation, President Bush declared that "the whole world is watching to see if we can act quickly to shore up our markets and prevent damage to our capital markets, businesses, our housing sector, and retirement accounts."

Also on Monday, Reuters reports that the Federal Reserve agreed to convert "once high-flying" Goldman Sachs and Morgan Stanley from investment banks "into more conventional depositary institutions," as part of Washington's plan to stabilize the financial market.

• Statement by the President on Legislation to Address Crisis in Financial Markets (WhiteHouse.gov)
• In Focus: Jobs and Economic Growth (WhiteHouse.gov)
• Washington Post: Bush Urges Quick Passage of Bailout Package
• Reuters: Investment Bank Model Abandoned; Bailout Debated
• BusinessWeek: Wall Street Bailout Faces Lawmakers, Lobbyists
• ABC News: Congress Pushes for Oversight in Historic Wall Street Bailout
• N.Y. Times: Minimizing Your Own Exposure to Risk