WASHINGTON (AFP) — US Treasury Secretary Henry Paulson urged Congress to swiftly adopt an unprecedented 700-billion-dollar financial rescue plan, deflecting calls from Democrats for measures to help at-risk homeowners.
President George W. Bush's administration has demanded lawmakers move quickly on the plan unveiled Friday to address the gravest financial crisis since the Great Depression, warning that the economy could collapse without prompt action.
"We need this to be clean and quick and we need to get it in place," Paulson said in an ABC television interview.
The Treasury secretary also said the United States was pressing other countries to forge bailouts for their financial institutions similar to the rescue plan.
"I'm also going to be pressing our colleagues around the world to design similar programs for their banks and institutions when they are appropriate," Paulson said in a television interview on Fox News Sunday.
US financial authorities have been working closely with their counterparts in Europe and Japan over the past 10 days to prevent a collapse of the global financial system.
The Bank of Japan said Monday it had injected another 1.5 trillion yen (14 billion dollars) into money markets as stocks in Japan opened sharply higher. The Japanese central bank injected 11 trillion yen into the system last week.
Paulson said the US bailout plan would also cover non-US institutions with operations in the United States.
Leaders of the Democratic-controlled Congress voiced support for the plan to buy the toxic mortgage-related assets of financial institutions but also said there should be some help for ordinary Americans hammered by the worst housing slump in decades.
Senator Charles Schumer of New York said the rescue was needed but had to be carried out in an open, transparent way and provide some relief for homeowners as well.
"We have to do something about the mortgage crisis, not just foreclosures but the price of housing, which is affecting everyone on Main Street," the influential Democrat told Fox.
In talks with lawmakers, Paulson appeared open to some changes to the proposed rescue plan, according to Schumer, who expressed optimism Congress would move quickly as urged by the Bush administration.
"We have a patient whose arteries are clogged, and the first thing you want to do is avoid a heart attack. So we have to do something.
"And I think the odds are even higher than 50 percent we'll get something done," Schumer said.
In interviews on several networks on Sunday, Paulson did not specify what changes he might accept but stressed the need to act without delay.
"There are many people in this country that need help. But the biggest help we can give the American people is to stabilize our financial system right now," Paulson said.
Paulson told ABC it was essential to prevent the financial system from clogging up, "because if it does clog up, this is going to have an adverse effect on people's abilities to get jobs, on their budgets, on their retirement savings, on lending for small businesses and so that's where the first priority has got to be."
Paulson acknowledged that some American homeowners need help in the wake of the US subprime mortgage crisis that triggered a global credit crunch 14 months ago. Tight credit has sent foreclosures spiking and home values have fallen as a glut of unsold homes sit on the market.
"Once we get the system stabilized, there's a lot of other things to be done," he said.
Negotiations on the proposed bailout were complicated by a tight presidential election race six weeks ahead of November 4 polls and as Democrats seek to bolster their narrow majority in Congress.
The bailout proposal comes on the heels of the unprecedented government rescue of giant insurer American International Group and the seizure of mortgage-finance giants Fannie Mae and Freddie Mac.
The Republican Senate Minority Leader, Mitch McConnell, issued a statement calling for the bailout plan to remain free of "partisan plans or pet projects."
Senate Banking Committee Chairman Chris Dodd agreed that "clean and simple" bill was necessary, but the Democrat also called for changes to the proposal to ensure accountability and assistance for homeowners.
Not all Republicans were on board with the Bush administration's departure from the party's conservative free-market principles.
Representative Mike Pence of Indiana said that "nationalizing every bad mortgage in America is not the answer."
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