Washington, DC — The Bush Administration laid out a massive plan this afternoon that would allow the government to take over $500 billion in mortgages and other bad debt from struggling institutions.
The proposal calls for Congress to create an independent entity in the Executive Branch that would have the authority to create a pool of bad loans and sour securities that officials say have a negative trickle down effect on the economy.
Republican Congressman Dan Lungren, whose 3rd District covers Calaveras County, says he learned about the proposal over a conference call with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernancke.
?They convinced me that the circumstances are dire enough that we need to take extraordinary action,? says Lungren. ?I think they were honest enough to suggest that we don´t know all of the problems that are out there, but using and analogy, I think this solution appears to be an effort to drain the swamp, rather than shoot every individual alligator.?
The Dow Jones Industrial Average rose 368 points today on news of the proposal. President Bush acknowledged in a press conference today that this is the widest form of government intervention to help failing financial institutions since the Great Depression.
Written by BJ Hansen