Fed jumps in for Wall St. again

Appearing on four of the five Sunday shows, Paulson repeatedly portrayed the plan as necessary to stave off one of the nation's worst economic calamities, but he is facing a tough job of selling it to some members of President Bush's own Republican Party who are concerned about its staggering cost to taxpayers, as well as perceptions that it favors financial institutions over ordinary Americans.

"This is the mother of all bailouts," Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, said on CBS' "Face the Nation."

Rep. Barney Frank (D-Mass.), appearing on the same program, added: "It's kind of hard to tell the average American that we're going to continue to have foreclosures that destabilize neighborhoods and deprive cities of revenues they need, but we're going to buy up the bad paper."

But Paulson said that the plan would benefit everyone because of the significant ripple effects that occur when companies cannot borrow money. "It pains me tremendously to have the American taxpayer be put in this position, but it's better than the alternative," he told NBC's "Meet the Press."

The plan would give the Treasury secretary broad authority to buy the troubled mortgage-related assets of financial institutions in order to stabilize financial markets, and he predicted that the "ultimate cost" to taxpayers would be far less than the "headline number" of $700 billion. "Those assets will be held and will be sold," Paulson told ABC.

He urged Congress to act this week, before Friday's scheduled recess for the fall campaign.

Frank, chairman of the House Financial Services Committee, sent Paulson a counterproposal Sunday that is expected to be the subject of intense negotiations. According to a copy of the document, it calls for:

* Requiring companies that sell bad assets to the government to meet "standards for executive compensation," including limits "as determined to be appropriate in the public interest in light of the assistance being given to the entity."

* Giving the comptroller general, who heads Congress' investigative arm, the Government Accountability Office, authority to oversee the program.

* Requiring Treasury to use its authority to work to "minimize foreclosures" and work with other federal entities that hold mortgage-related assets to acquire the loans that can be modified and restructured and, "where permissible, to permit bona fide tenants who are current on their rent to remain in their homes under the terms of the lease."