U.S. Proposes Spending $700 Billion To Buy Bad Mortgages

Washington, D.C. (AHN) - As Wall Street suffers from a housing and insurance collapse, President George W. Bush is calling on lawmakers in Congress to authorize spending $700 billion to purchase troubled mortgage assets and relieve pressure from failing banks and lenders.

While the request is the largest intervention since the Great Depression, Bush warns that "the risk of doing nothing far outweighs the risk of the package."

The bill gives the Secretary of the Treasury the power to purchase "mortgage-related assets from any financial institution having its headquarters in the United States," keeping in mind that the deals go towards "providing stability or preventing disruption to the financial markets or banking system" and "protecting the taxpayer."

"This is a pivotal moment for America's economy," Bush explained in his weekly radio address. "Problems that originated in the credit markets and first showed up in the area of subprime mortgages have spread throughout our financial system."

"As a result, the government is acting to protect our Nation's economic health from serious risk... Given the precarious state of our financial markets and their vital importance to the daily lives of the American people, government intervention is not only warranted, it is essential," Bush said.

"These measures require us to put a significant amount of taxpayer dollars on the line. But I'm convinced that this bold approach will cost American families far less than the alternative," Bush added.

Meanwhile, Treasury Secretary Henry Paulson vowed to "spend the weekend working with members of Congress of both parties to examine approaches to alleviate the pressure of these bad loans on our system, so credit can flow once again to American consumers and companies."

"Our economic health requires that we work together for prompt, bipartisan action," Paulson added.