Congress, White House Haggle Over Bailout

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WASHINGTON - Everyone on Capitol Hill seems to agree that they must act and act fast to rescue failing firms in a way that might steady the financial system.

"We are convinced that inaction could lead to disaster," Sen. Robert Bennett said.

Sen. Chris Dodd said, "We also want to act responsibly and carefully to make sure we do this correctly."

"There's one word that underscored our meeting, which is bipartisan. And with this situation, with the gravity of what we have, neither party can do this alone," Sen. Charles Schumer said.

Is the U.S. government doing the right thing with its bailout package?  Click play for insight on this from James Gattuso of the Heritage Foundation.

But some in Congress have serious reservations about the $700 billion plan for the Treasury to buy up the most distressed assets of flailing Wall Street institutions.

Rep. Brad Sherman said, "This is just a license to the Treasury to hand out money in return for trash."

"We're past the honeymoon phase and starting to ask the really relevant questions about what does this mean, what's the cost to taxpayers, and how is this going to be implemented," Charles Schwab's Chief Investment Officer Liz Ann Sonders said.

"This is an immense amount of money, tremendous amount of authority devolving to the Secretary of Treasury, with a fairly certain knowledge that in about six weeks there's going to be a different Secretary of the Treasury," Sen. Mel Martinez said.

Congress thinks it can have a plan to President Bush within the next several days. But it wants changes in what his administration is proposing.

Some lawmakers want judges to be able to rewrite mortgages so bankrupt homeowners could have lower payments.

"What's being proposed by this administration simply doesn't address that. It wants to help institutions and not families," John Taylor of the National Community Reinvestment Coalition said.

The Bush administration has expanded its original plan, and now wants the power to be able to buy up virtually any bad asset - even bad car loans and credit card debt. It's all an attempt to get credit flowing again, since that's the oil that greases the skids of the economy.

But some analysts are worried that could cost about a trillion dollars, and that itself could create new problems, like nasty inflation.

Sean Egan, financial analyst for Egan-Jones said, "When you're injecting one trillion dollars into the economy that didn't exist before it has to have a huge pressure on inflation. There's no way around it."

Despite all the questions, virtually everyone agrees that Washington has to - and will - act soon to prevent any more serious problems in the financial system.

And the President says the whole world is watching to see if the U.S. can act quickly to shore up its markets.

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