Bush prefers Paulson Wall St. rescue plan

WASHINGTON (Reuters) - U.S. President George W. Bush prefers the plan to rescue the financial system drawn up by Treasury Secretary, Henry Paulson, the White House said on Thursday as a new proposal emerged in Congress to address the situation.

"The president supports the core of Secretary Paulson's plan," said White House spokesman Tony Fratto. "There are lots of ideas people are proposing and Secretary Paulson can work with members to find a route to reach an agreement."

A group of conservative House Republicans on Thursday presented a mortgage insurance plan as an alternative to the Paulson plan, which has encountered criticism from some Republican and Democratic lawmakers.

That plan calls for the U.S. government to offer insurance coverage for the roughly half of all mortgage-backed securities that it does not already insure.

"We believe Secretary Paulson's plan is the best option for solving the problem," Fratto said, referring to the proposal for the government to take the illiquid assets off the books of lenders and hold them until they could be sold at a later date.

(Reporting by Jeremy Pelofsky, editing by Carol Bishopric)