Latest development from the US20 September, 2008, 19:51. Posted by Zarathustra
The U.S. Treasury today asked Congress for authority to buy as much as $700 billion in soured mortgage-related assets from the nation’s financial institutions in the most far-reaching federal intrusion into markets since the Great Depression.
The legislation is aimed at ending a year-long crisis that toppled four financial giants, forced two into mergers and has brought credit markets to the brink of paralysis. It would give Treasury Secretary Henry Paulson sweeping power to hire managers and award contracts to private companies without review by courts or government agencies.
"It sounds like Paulson is asking to be a financial dictator, for a limited period of time,” said historian John Steele Gordon, author of "Hamilton’s Blessing,” a chronicle of the national debt. "This is a much-needed declaration of power for the Treasury secretary. We can’t wait until the next administration in January.”
Paulson is seeking authority to step in as buyer of last resort for mortgage-linked assets that few other financial institutions in the world want to buy, following government takeovers of mortgage giants Fannie Mae and Freddie Mac and insurer American International Group Inc. Congressional Democrats, including House Financial Services Committee Chairman Barney Frank, have already indicated they will use the legislation as a vehicle to help homeowners avoid default.