WASHINGTON, Sept, 20, 2008 (AFP) - Democratic leaders stunned by the depth of the economic meltdown Friday pledged quick action in Congress on a huge bailout, but demanded help for US workers as well as reeling finance firms.
A senior official in the administration of President George W. Bush said the details of its massive finance sector rescue plan worth hundreds of billions of dollars were sent to members of Congress late Friday.
News of the massive rescue plan, which Bush said would allow “the federal government's purchase of illiquid assets such as troubled mortgages from banks and other financial institutions,” fueled a powerful market rebound.
Senate Banking Committee Chairman Chris Dodd said lawmakers were shocked into uncharacteristic silence when they were briefed on the catastrophic potential of the meltdown by Federal Reserve chief Ben Bernanke on Thursday.
“There was dead silence in the room for five to 10 seconds, the oxygen went out of the room, people were stunned by what they heard,” Dodd told CNN.
Senior Democrats admitted there was little option but to go along with the biggest government bid to buy up bad debts and rescue blitzed financial firms in decades.
Democratic House of Representatives speaker Nancy Pelosi said she told President George W. Bush she was committed to “quick, bipartisan action.”But she said care must be taken to insulate normal Americans -- “Main Street” -- from the meltdown in the Wall Street financial sector, and to reduce mortgage foreclosures.
Senate Majority leader Harry Reid also seemed to be eyeing November's congressional elections, in which Democrats hope to swell majorities racked up in the 2006 elections when they captured both the House and Senate.
“To avoid a deepening crisis and turn this economy around, the proposal must not only address the broader, underlying structural issues in the financial markets, but also protect taxpayers and strengthen the middle class.”Reid also struck the “Main Street” theme, as did Democratic presidential candidate Barack Obama in Florida, reflecting the party's coordinated response to the crisis which spiraled out of control last weekend.
And while blaming “failed” Bush administration policies for the turmoil, he pledged to work with the White House, Treasury and Federal Reserve to put it right.
Senator Dodd was asked about the timing of Congressional action on the proposed intervention and whether Congress could act quickly enough to get the package on the table by the end of next week.
“We will see, our hope is that we can do that,” Dodd told reporters. “But, this problem is serious, the clock is not going to determine, if it takes us two weeks we will do it, if it takes us three weeks we will do it.”Dodd said that he and other lawmakers were anxious to learn the specifics of the huge government bailout plan for the financial sector.
Dodd described the meeting between Treasury Secretary Henry Paulson, Bernanke and top congressional leaders on Thursday night as “about as sobering a meeting as any of us have ever attended in our careers here.”Dodd's fellow Democratic Senator Chuck Schumer said that the administration painted a dire picture of a failure to act to shore up the markets.
“The question is what's the alternative? The picture they painted if nothing was done was really troubling, deeply, deeply troubling.”Dodd warned however that lawmakers would not be able to simply use the rescue package to get long sought after projects passed by Congress.
“This will not be a Christmas tree,” he said.
Earlier, Dodd warned on ABC television that the situation facing the US economy was dire.
“I've been here 28 years, to listen to the language of last evening, we maybe were days away from a complete meltdown of our financial system,” Dodd said.
Bush earlier said his administration was working to mitigate the massive crisis which sent global markets into a tailspin, despite a massive government bailout of insurance giant American International Group and a takeover of mortgage finance firms Fannie Mae and Freddie Mac.
The credit crunch was caused by a meltdown in US home prices after a frenzied boom that induced a wave of investments before a collapse.