ANALYSTS' VIEW: Congress gets $700 bln financial bailout plan

NEW YORK (Reuters) - The Bush administration on Saturday sent a $700 billion financial markets rescue plan to Congress aimed at stemming the financial crisis that grew out of the steepest U.S. housing slump since the Great Depression.

KEY POINTS: According to a draft of the proposed legislation obtained by Reuters: * The government could purchase as much as $700 billion in mortgage-related assets from U.S.-headquartered institutions. * Decisions by the treasury secretary related to the buyback program could not be reviewed by any court. * In a related move, the U.S. government's debt limit would be raised to $11.315 trillion from $10.615 trillion.

COMMENTS:

CHRISTOPHER LOW, CHIEF ECONOMIST AT FTN FINANCIAL IN NEW

YORK:

On proposed federal mortgage bailout:

"It's going to work. This is what we need to do. There is not enough liquidity in the market right now to put a price on a lot of these securities. It's becoming increasingly difficult to find a buyer for them. Once the government takes some of the supply out of the market, these securities will trade again. This is a way to get the inventory down."

"What this program does indirectly is that it will support home prices."

"Taxpayers can make money off this program, albeit it would be a long time. A lot of the mortgages are still good and they are performing. Still no two mortgage pools are alike and how do you find the proper clearing prices for them?"

"There's no such thing as an instant fix. There is so much that's broken."

On the catalyst for the bailout plan:

"What is too big to fail? It was Lehman."

The Primary Reserve fund "broke the buck because of the Lehman bankruptcy. Institutions started withdrawing money from money market funds. The money market froze up. Businesses can't finance inventories because they can't sell their commercial paper. The FHLB (Federal Home Loan Bank), which was selling $50 billion in discount notes a month, couldn't sell those notes."

"On top of that, institutions pulled money from their prime brokerage accounts at Morgan Stanley and Goldman Sachs. They didn't have any more securities to lend out. That drop in liquidity was a wake-up call."

On the Federal Reserve and other central banks:

"I don't think it's necessary for foreign central banks to play this game" - on other central banks needing to set up their own mop-up funds for bad mortgages.