WASHINGTON President Bush defended the $700 billion cost of his financial bailout proposal, saying Saturday it needed to be massive so that turmoil on Wall Street did not spread to Main Street.
Bush pledged to work with Congress to quickly pass legislation as part of the largest financial bailout since the Great Depression.
"You get it's big because it needed to be big," Bush said, acknowledging that hundreds of billions of dollars in taxpayer money is being put at risk.
"I believe when it's all said and done, however, that the taxpayer is going to get a lot of that money back," he said.
Trying to allay public fears about the health of the economy and people's pocketbooks, Bush said that the risk of doing nothing far outweighed the risks of government intervention.
"People are beginning to doubt our system, people were losing confidence and I understand it's important to have confidence in our financial system," he said. Over time taxpayers will "get a lot of the money back," he said.
Bush's remarks in the Rose Garden capped a roller-coaster week on Wall Street. The Federal Reserve engineered an $85 billion takeover of insurance giant AIG this week after seizing control of housing giants Freddie Mac and Fannie Mae. One investment giant, Lehman Brothers, collapsed and a second, Merrill Lynch, was purchased by rival Bank of America for less than half its value.
The president, speaking to reporters after a meeting with Colombian President Alvaro Uribe, said he initially thought the government could deal with problems one at a time, as in the case of Fannie Mae and Freddie Mac, Lehman Brothers and AIG. He said he soon realized that the problems went beyond Wall Street.
"So when one card started to go, we were worried about the whole deck going down, and so therefore moved, and moved hard," Bush said.
"This is Wall Street plus Main Street," he said.
The president favored government intervention even though it opened him up to criticism from financial conservatives who are raising their eyebrows at the pricetag of the bailout plan. "Look, I'm sure there are some of my friends out there saying, 'I thought this guy was a market guy. What happened to him?"' Bush said.
"Well, my first instinct wasn't to lay out a huge government plan," he said. "My first instinct was to let the market work until I realized, upon being briefed by the experts, of how significant this problem became."
According to a draft of the proposal obtained by The Associated Press, the Bush administration is asking Congress to let the government buy $700 billion in bad mortgages. The plan would give the government broad power to buy the bad debt of any U.S. financial institution for the next two years. It would raise the statutory limit on the national debt from $10.6 trillion to $11.3 trillion to make room for the massive rescue. The proposal does not specify what the government would get in return from financial companies for the federal assistance.
Administration officials and members of Congress were to negotiate throughout the weekend. The plan is designed to let faltering financial institutions unload their distressed mortgage-related assets on the government, and in turn the taxpayer. The White House and congressional leaders hoped the developing legislation could pass as early as next week.
Democrats are insisting the rescue package include mortgage help for homeowners facing foreclosures. They also are also considering attaching additional middle-class assistance to the legislation despite a request from Bush to avoid adding controversial items that could delay action. An expansion of jobless benefits was one possibility.
Asked about the chances of adding such items, Bush sidestepped the question, saying only that now was not the time for political posturing. "I think most leaders would understand we need to get this done quickly, and you know, the cleaner the better," he said about legislation he hopes Congress sends back to him quickly.
John McCain, the GOP presidential nominee, said the financial crisis will require leadership and action to restore a sound foundation to U.S. financial markets. Democratic rival Barack Obama said the administration and failed Republican policies led to the market collapse, and that McCain offered little but more of the same.