US races to forge historic financial sector bailout

WASHINGTON, September 21, 2008 (AFP) – Senior US officials and lawmakers were locked in negotiations Saturday over an historic 700-billion-dollar bailout plan for the financial sector in the worst crisis since the Great Depression.

Coming on the heels of the unprecedented government rescue of giant insurer American International Group (AIG) and the seizure of mortgage-finance giants Fannie Mae and Freddie Mac, the legislation could produce the most significant changes in financial regulation since the 1930s.

The plan, sent to Congress late Friday by President George W. Bush’s administration, gives Treasury Secretary Henry Paulson sweeping authority over the next two years to buy as much as 700 billion dollars of toxic mortgage-related assets to stem the grave financial crisis, according to a draft proposal.

“This is a big package because it was a big problem,” Bush told reporters Saturday.

Speaking after a week of upheaval in financial markets, Bush defended the proposed bailout, citing the gravity of the financial crisis.

“I will tell our citizens and continue to remind them that the risk of doing nothing far outweighs the risk of the package,” Bush said.

“And that over time, we’re going to get a lot