What happened to laissez faire?

Treasury Seeks Authority to Buy $700 Billon in Mortgage Assets

By Alison Fitzgerald and John Brinsley


Sept. 20 (Bloomberg) -- The Bush administration asked Congress for unchecked power to buy $700 billion in bad mortgage investments from U.S. financial companies in what would be an unprecedented government intrusion into the markets.

The plan, designed by Treasury Secretary Henry Paulson, is aimed at averting a credit freeze that would bring the financial system and economic growth to a standstill. The bill would bar courts from reviewing actions taken under its authority.

``It sounds like Paulson is asking to be a financial dictator, for a limited period of time,'' said historian John Steele Gordon, author of ``Hamilton's Blessing,'' a chronicle of the national debt. ``This is a much-needed declaration of power for the Treasury secretary. We can't wait until the next administration in January.''

The plan necessitates raising the ceiling for the national debt and spends as much money as the combined annual budgets of the Departments of Defense, Education and Health and Human Services. Paulson is asking for the power to hire asset managers and award contracts to private companies.

A failure by the government to support the U.S. financial system could lead to "a depression," Senator Charles Schumer told reporters in New York. "To do nothing is to risk the kind of economic....read more.