Alison Fitzgerald and John Brinsley
September 21, 2008
The Bush administration asked Congress for unchecked power to buy $700 billion in bad mortgage investments from U.S. financial companies in what would be an unprecedented government intrusion into the markets.
The plan, designed by Treasury Secretary Henry Paulson, is aimed at averting a credit freeze that would bring the financial system and economic growth to a standstill. The bill would bar courts from reviewing actions taken under its authority.
“It sounds like Paulson is asking to be a financial dictator, for a limited period of time,” said historian John Steele Gordon, author of “Hamilton’s Blessing,” a chronicle of the national debt. “This is a much-needed declaration of power for the Treasury secretary. We can’t wait until the next administration in January.”
As congressional aides and officials scrutinized the proposal, the Treasury late today clarified the types of assets it would purchase. Paulson would have authority to buy home loans, mortgage-backed securities, commercial mortgage-related assets and, after consultation with the Federal Reserve chairman, “other assets, as deemed necessary to effectively stabilize financial markets,” the Treasury said in a statement.