Treasury Unveils $700 Billion Financial Rescue

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Treasury Unveils $700 Billion Financial Rescue
By Benton Ives, CQ Staff


Treasury Secretary Henry M. Paulson Jr. asked Congress for broad powers to purchase up to $700 billion worth of mortgage-related assets and securities, in a bid to rescue ailing financial institutions crippled by the souring instruments.

Under a legislative proposal circulating early Saturday morning, the Treasury would be “authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.”

The proposal would give the Treasury wide latitude to buy, sell and hold mortgage-related assets. However, the Treasury would only be allowed to have $700 billion worth of those assets “outstanding at any one time,” the proposal said.

The plan broadly defines a “mortgage-related asset” as “residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages.” In order to qualify for purchase under the program, the asset would have to have been originated or issued “on or before September 17, 2008.”

The proposal also would raise the statutory debt limit to $11.3 trillion, up from $10.6 trillion under current law.

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