Legal Commentary

Bush Submits $700 Billion Bailout Proposal to Congress

By Jeralyn

Here is the text of the bailout proposal President Bush has sent to Congress.

Sent overnight to Congress, President Bush says the risk of doing nothing is greater than the risk posed by the bailout.

The plan would allow the Treasury to buy up mortgage-related assets. The aim is for the government to buy the securities at a discount, hold onto them and then sell them for a profit.

Is he right? According to the experts quoted in the article:

The jury is still out on whether the proposal will fix the financial crisis, although experts are cautiously optimistic the plan will help the housing crisis. It will help banks shore up their balance sheets by removing hard-to-value assets. This would address the seemingly endless rounds of writedowns and capital raising that have been rocking the financial sector.

Without these bad loans weighing on their books, banks may be more willing to lend. Or at least that's the goal. The problem is that the bailout will not automatically make banks profitable, nor will it stop the slide in home values that is wreaking havoc on the economy.

Full post as published by TalkLeft on September 20, 2008 (boomark / email).