WASHINGTON (Reuters) - The Bush administration proposed a $700-billion taxpayer-funded plan on Saturday to buy up toxic mortgage-related securities in an urgent effort to calm financial markets and attack the nation’s housing crisis.
Under the program, the U.S. Treasury Department would buy, or commit to buy, “mortgage-related assets from any financial institution having its headquarters in the United States,” said a copy of the Treasury Department’s draft legislation obtained by Reuters.
The department could hire asset managers to handle the securities, which could include residential or commercial mortgages and related instruments that were originated or issued on or before September 17, 2008, the draft said.
Congressional committees were to be briefed on Saturday on the legislation, which could be considered by the U.S. House of Representatives and Senate as early as next week.
The plan also calls for raising the federal government’s borrowing authority to $11.315 trillion. The debt limit is currently $10.615 trillion.
The government is moving aggressively to soak up billions of dollars of hard-to-sell mortgage-backed securities and related assets that have been choking world capital markets since the bursting of a historic U.S. home price bubble.
Reporting by Richard Cowan and Kevin Drawbaugh, editing by Jackie Frank