George's Bottom Line on Bank Debt Agency Plan

Sept. 18, 2008— -- The government's consideration of creating a special agency to deal with the bad debt run up by banks sent a jolt through Wall Street today, helping fuel a 400-point rally. The special agency is the kind of deal by lawmakers that could help the country avoid a recession. But it's also the kind of deal that's politically very complicated.

"World News" anchor Charles Gibson discussed the politics of creating a special agency to help banks with ABC's chief Washington correspondent George Stephanopoulos.

CHARLES GIBSON: And we're going to turn to our chief Washington correspondent George Stephanopoulos. George, I know you've been taking the temperature on Capitol Hill. Is Congress going to go for this? As [ABC's Betsy Stark reports this tentative plan by the U.S. treasury secretary, Security and Exchange Commission chair and Congress is very expensive.]

GEORGE STEPHANOPOULOS: Not happily, Charlie. But they are talking to the same economists, the same financiers that the administration is talking to and they're staring into the abyss. They know there could be a financial catastrophe if the government doesn't do this. But they also know..they're facing a lot of anger on Main Street. They're hearing from their constituents, who say "This is too expensive. There are too many bailouts. You have to do something for us." So the speaker of the House and other Democrats are also going to push that as part of the price for agreeing to a program like this, there is a second stimulus package that will include funding for unemployment, foods stamps, for home heating assistance -- direct aid to taxpayers and consumers.

CHARLES GIBSON: Wait a minute, you'd have an assumption of some of the bad loans are to be very expensive and then have another stimulus package, which is even more expensive?

GEORGE STEPHANOPOULOS: Charlie, this is really going to add up to into hundreds of billions. Eventually even more than a trillion dollars. The stimulus package that Democrats have been talking about was about 50 billion. They were hearing from economists today that perhaps in order to avoid a recession, they might have to go up to 100 or 150 [billion]. That's where the fight is going to be. The scope and scale of this stimulus package.

CHARLES GIBSON: But George, that's like coming home and saying, 'Honey, I didn't get the raise but we're going to buy a new house, we're going to buy the boat, we're going to buy a Cadillac and we're going to fly first class to Europe.

(laughter)

GEORGE STEPHANOPOULOS: And the members of Congress are hearing exactly that from their constituents. But they also know that if they don't approve the package that the president is calling for and there's a financial catastrophe, and if they don't give something to consumers and taxpayers, they'll be getting even more angry down the road and might not avoid a recession.

CHARLES GIBSON: And very quickly, the presidential candidates -- [Barack] Obama [and John] McCain -- do they go for this?

GEORGE STEPHANOPOULOS: Almost certainly, Charlie. I've talked to both campaigns, they're likely to go along with this because, again, they know the consequences if this doesn't pass.

CHARLES GIBSON: All right. George Stephanopoulos down in Washington. Thanks to you.