Dire Bernanke Speech Shocked Congress

The government doesn't want to own the bad mortgages for long. The plan is to resell them eventually and recoup the money. The Treasury's new powers would last for only two years and the secretary would have to report to Congress semi-annually.

"The government becomes essentially, one of the largest, or the largest homeowner in the country," said Stanford Group Company analyst Anne Mathias. "When you joke about your mortgage and you say, 'Well, I don't own my house, the bank owns my house.' Well, now, you don't own your house but the government owns your house."

But the bailout could have an economic downside — inflation.

"[There is] no question at all is that this could increase inflation," Vise said.

He said officials believe a rise in inflation is less of a problem than troubles currently causing the economy's hemorrhaging.

Democrats have said they will work with the administration to pass a plan, but will demand it include relief for homeowners struggling with mounting debt and not just Wall Street.

It's the Economy Again, Stupid

The country's financial troubles have become a major focus in the presidential election.

"It looks like it's a defining moment in the race," Stephanopoulos said on "GMA" today. "This crisis over the last week has really brought focus to the economy."

Already, Republican nominee John McCain and rival Barack Obama have come out swinging on the issue.

Obama has hammered McCain for what he believes is a flip-flop -- using the Arizona senator's own words against him. He referred to a magazine article McCain once wrote where he suggested the country should cut regulation of health insurance "as we have done over the last decade in banking."

"He wants to run health care like they've been running Wall Street," Obama told a crowd of more than 15,000 in Jacksonville, Fla. "Well, senator, I know some folks on Main Street who aren't going to think that's a good idea."

The McCain campaign has called that assertion a distortion and claims its six-point plan supporting new regulations shows leadership.

Obama canceled unveiling a plan of his own, as his aides said a measured approach is more presidential.

America's financial troubles have taken the focus off the personalities of the campaigns and back toward the issues, Stephanopoulos said. He added that it's had a benefit for Obama, who spent the last several weeks trying to combat the Sarah Palin effect, which boosted McCain's campaign and its support.

But one thing is inescapable. Whoever wins the presidency will inherit an office facing a deep recession and spend the first year digging out of an economic hole rather than furthering his own agenda, Stephanopoulos said.

When asked what will happen if the emergency bailout fails, Paulson asserted, "This is something that has to work. I very much believe it will work."

In a separate appearance on "Meet the Press," Paulson admitted the bailout would be costly for taxpayers, but said that the government was picking the better of two bad choices.

"It pains me tremendously to have the American taxpayer put in this position," Paulson said, "but it is better than the alternative."

The Associated Press contributed to this report.

  • 1
  • |
  • 2
  • |
  • 3
  • |
  • 4
Join the Discussion
blog comments powered by Disqus
You Might Also Like...