The legislation gives Treasury Secretary Henry Paulson authority to own as much as $700 billion in mortgage-related assets at one time. The bill would raise the nation's debt ceiling to $11.315 trillion from its current $10.615 limit.
The legislation was forwarded to congressional leaders in both political parties early this morning. The move comes as Paulson and Federal Reserve Chairman Ben S. Bernanke are pressing for action from Congress to help stop a contagion of credit risk that has toppled four financial giants and forced two into mergers as capital flight squeezes Wall Street.
``This is going to be a big package because it's a big problem,'' President George W. Bush said following a meeting with Colombian president Alvaro Uribe at the White House. ``We need to get this done quickly, and the cleaner the better.''
The proposal requires the Treasury secretary to report back to Congress three months after the government first uses its new powers, and then semiannually after that.
Bush said he called leaders in both chambers of Congress and ``found a common understanding of how severe the problem is and how necessary it is to get something done quickly.''
Under the proposal, the Treasury secretary is given wide berth to take action ``as the Secretary deems necessary'' to hire people, enter into contracts, and issue regulations. The proposal requires the Treasury to simultaneously consider market stability and protecting the taxpayer.
The Treasury plans to hire asset managers to purchase the assets through so-called reverse auctions, seeking the lowest prices, a person briefed on the proposal said yesterday. The proposal specifies that only assets from U.S.-based financial institutions issued or originated on or before Sept. 17 can be purchased.
The authority expires two years after it is enacted.
Bush today said he's unconcerned that the price tag on the package may seem high.
``I'm sure there are some of my friends out there that are saying, I thought this guy was a market guy, what happened to him,'' the president said. ``My first instinct was to let the market work, until I realized, while being briefed by the experts, how significant this problem became.''
Bush said the financial crisis is putting ``hundreds of billions of dollars at risk,'' but ``over time, we're going to get a lot of the money back.''