US Treasury Secretary Henry Paulson took his case for an unprecedented $700 billion bailout of financial markets to the American people tonight, saying it was needed to prevent further damage to an already fragile economy.
"This is not something that we wanted to do. This was something that was very necessary," Paulson said on NBC. "We did this to protect the taxpayer."
The sweeping Bush administration plan would have the Treasury buy up bad mortgage-related debts from financial institutions to try to stem the worst financial storm since the Great Depression.
Paulson said US authorities were pressing other governments to take similar actions.
"We have a global financial system and we are talking very aggressively with other countries around the world, and encouraging them to do similar things, and I believe a number of them will," he said on ABC.
Democratic lawmakers, who control both houses of the US Congress, said they would put the bailout in place quickly, but also want changes such as more oversight, limits on executive pay at participating firms, and assistance for homeowners.
New York Sen. Charles Schumer, however, said Democrats would not load up the bill with numerous extraneous provisions and said a separate measure to give a lift to the economy would likely be moved separately.
"We will not Christmas tree this bill," Schumer said on "Fox News Sunday". He did say, however, struggling homeowners needed more help.
Schumer, a member of the Democratic leadership, and Senate Republican Whip Jon Kyl of Arizona both predicted lawmakers would resolve their differences and pass a bailout package by week's end.
"The chances are better than 50-50 that we will get it done by the end of the week, and hopefully it won't be bogged with down with too many extraneous and costly provisions," Kyl said.
Paulson, who would have sweeping powers over the massive war chest under the Treasury-proposed plan, appeared on four national talk shows to make his case that the consequences of inaction would be so dire that the large burden taxpayers would shoulder would be worth it.
He said the final cost would likely be far shy of the $700 billion initial price tag since the government would be able to hold the debt until markets stabilize and prices recover.
"This is the least costly path," Paulson said. Still, he admitted there was no guarantee the debts would regain anything close to their original value.
To allow for the bailout, the US government's debt limit would rise to $11.315 trillion from $10.615 trillion.
While the three-page bill proposed by Treasury said participating financial firms would have to be headquartered in the United States, Paulson said that even foreign firms should be able to unload assets if they have large operations in the United States.
"If a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institution," Paulson said.
The Treasury chief did confirm that hedge funds - investment vehicles for the wealthy - would not be eligible.
The bailout plan follows a wrenching week that transformed Wall Street with Lehman Brothers' failure, the agreed sale of Merrill Lynch & Co and a government takeover of ailing insurer AIG.
Under the plan, the US government could acquire up to $700 billion in home and commercial mortgages and related assets over the next two years, but it could hold them longer.
But even the conditions on the type of assets and the source of them could be waived by the Treasury secretary, in consultation with the chairman of the Federal Reserve, if necessary to stabilize markets, the Treasury said yesterday, although those provisions were not in the draft bill.