US Treasury Secretary Henry Paulson said on Sunday that foreign banks will be able to unload bad financial assets under a $700 billion US proposal aimed at restoring order during a devastating financial crisis. “Yes, and they should. Because ... if a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institution,” Paulson said on ABC television's “This Week with George Stephanopolous.” Paulson was appearing on the Sunday television talk show circuit to fill in some of the details of the US government plan for a sweeping bailout to mop up hundreds of billions of dollars in toxic mortgage debt. The moves capped a week in which financial markets faced their most serious confluence of crises since the Great Depression in the 1930s and threatened national economies and the worldwide banking system. Paulson also said the nation's credit markets are very fragile and still frozen and Congress must move quickly to pass a $700 billion bailout package for financial firms. Paulson said the nation's outdated regulatory system for financial markets must be overhauled, but the first job is to get the most sweeping rescue package since the Great Depression passed by Congress in coming days. “The credit markets are still very fragile right now and frozen,” Paulson said in an earlier interview on NBC's Meet the Press. “We need to deal with this and deal with it quickly.” Paulson made the rounds of the television talk shows to stress the need for speed in getting the bailout package approved. The administration was negotiating the details of the proposal with members of Congress with the expectation that it can be passed in the next week. Paulson said that “it pains me tremendously to have the American taxpayer put in this position, but it is better than the alternative.” Paulson and President George W. Bush have argued that the alternative would be credit markets that remain frozen, meaning that businesses will fail because they can't get the loans they need to operate and the economy will grind to a halt because consumers won't be able to get loans to make the purchases that keep the economy moving forward. On Saturday, Bush said the White House is ready to work with Congress to quickly enact legislation to allow the government to purchase hundreds of billions of dollars worth of bad debt linked to the collapse of the housing market. Congressional aides and administration officials were working through the weekend to fill in the details of the proposal. The Bush proposal that would dole out huge sums of money to Wall Street firms and bankers is a mere three pages in length and is vague in terms of determining which institutions would qualify or say what – if anything – taxpayers would get in return. “It's a rather brief bill with a lot of money,” said Sen. Chris Dodd, the Banking Committee chairman. “We understand the importance of the anticipation in the markets, but we also know that what we're doing is going to have consequences for decades to come. There's not a second act to this – we've got to get this right.” Democrats, who say they will work with the administration to pass a plan, are demanding it include relief for homeowners struggling with mounting debt, not just for Wall Street. The proposal would raise the statutory limit on the national debt from $10.6 trillion to $11.3 trillion to make room for the massive rescue.
