Bush Urges Congress to Enact Rescue Package

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Bush: Economy Stable Despite Financial Crisis

President Bush said Friday that his administration is taking 'unprecedented action' to deal with the ailing financial markets.

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He said he would refrain from presenting his own detailed blueprint for solving the crisis until he could fully review the one being proposed by Treasury and the Federal Reserve.

"I know these are difficult days," he said. "But . . . this is not a time for fear; it's not a time for panic. It's a time for resolve and a time for leadership."

Sen. John McCain (Ariz.), the Republican presidential nominee, said today that the Federal Reserve must "get out of the business of bailouts" and "get back to its core business of responsibly managing our money supply and inflation." McCain told a group of business leaders in Wisconsin that, if elected, he would "propose and sign into law reforms to prevent financial firms from concealing their bad practices."

McCain also appeared to chide the Bush administration in his remarks, saying that if he were elected, Treasury policies would be more consistent.

"In cases where failing companies seek taxpayer bailouts, the Treasury Department will follow consistent policies in deciding whether to guarantee loans," McCain said. "With billions of dollars in public money at stake, it will not do to keep making it up as we go along."

At a campaign rally in Wisconsin, McCain outlined what he described as a plan to reform U.S. financial markets by creating a "Mortgage and Financial Institutions Trust" (MFI) as part of the Treasury Department. He said the new organization would be "an early intervention program to help financial institutions avoid bankruptcy, expensive bailouts and damage to their customers."

The trust would offer troubled institutions an orderly process to identify bad loans, would provide funding at reasonable interest rates and eventually would sell the loans to the private sector at a profit, his campaign said.

"This will get the Treasury and other financial regulatory authorities in a proactive position instead of reacting in a crisis mode to one situation after another," McCain told supporters in Green Bay. "The MFI will restore investor and market confidence, build sound financial institutions, assist troubled institutions and protect our financial system while minimizing taxpayer exposure."

He pledged to take additional steps to ensure that "a crisis like this is never allowed to build and break over the American people again."

Senate Majority Leader Harry M. Reid (D-Nev.) said the administration's proposal "must not only address the broader, underlying structural issues in the financial markets, but also protect taxpayers and strengthen the middle class."

Although the current crisis "is a direct legacy of Bush-McCain economic policies that have failed this nation for eight years," Reid said, he pledged to work with the White House, Paulson and Bernanke "to provide relief for struggling Americans and create long-term solutions that will keep this kind of crisis from happening again."

Interviewed on ABC's "Good Morning America" program, Sen. Christopher J. Dodd (D-Conn.), chairman of the Senate Banking Committee, said a briefing last night by Paulson and Bernanke suggested that "we're literally maybe days away from a complete meltdown of our financial system."

Sen. Richard C. Shelby (Ala.), the top Republican on the banking committee, said on the same program that the cost of the rescue package could amount to "at least" half a trillion dollars. "But if you look at what the Fed has already done, and the extension of power to the Treasury to deal with Fannie Mae and Freddie Mac, I believe we're talking about $1 trillion," he said.

In a news briefing later, Dodd declined to put a dollar estimate on the rescue plan.

"This will be a very difficult plan," he said. "We've already been told it is going to be a very costly plan. How much? We don't know."

He said he hopes the eventual legislation deals with the causes as well as the effects of the crisis, notably the persisting problem of housing foreclosures.

"So my hope is that this plan will not only allow us to deal with illiquid debt and obligations out there but also focus as well on bringing to a closure the foreclosure problem as well," Dodd said.