A US$700 billion plea

US Treasury Secretary Paulson and Fed Chief Bernanke say $700 billion bailout plan a necessity and cost of inaction could be dire.

Bernanke and Paulson face questions about a proposed $700-billion plan that would have Treasury buy bad assets from financial institutions and hold them until they could be sold at a later date.

STORY:

U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke took their case for a massive Wall Street bailout to Capitol Hill, urging Congress to act swiftly and warning of dire consequences if they delay.

Fed Chairman Ben Bernanke.

SOUNDBITE: Fed Chairman Ben Bernanke saying (English):

"Action by Congress is urgently required to stabilize the situation and avert what could otherwise be very serious consequences for our financial markets and our economy,"

Bernanke and Paulson face questions about a proposed $700-billion plan that would have Treasury buy bad assets from financial institutions and hold them until they could be sold at a later date.

Paulson said that with the broader economy now under threat, it was essential to move beyond the case-by-case approach followed in the takeover of Fannie Mae and Freddie Mac and the bailout of insurer AIG.

SOUNDBITE: Treasury Secretary Henry Paulson, saying (English):

"We saw market turmoil reach a new level last week, and spill over into the rest of the economy," We must now take further, decisive action to fundamentally and comprehensively address the root cause of this turmoil."

Banking Committee Chairman Chris Dodd indicated there would be no blank check.

SOUNDBITE: Banking Committee Chairman Chris Dodd, saying (English):

"I understand speed is important, but there is no second act. There is no alternative, so it is critical that we get it right."

Analysts said it appeared Paulson and Bernanke were trying to head off opposition to the bailout plan in Congress by stressing the serious consequences of inaction.

Congressional Democrats want to add assistance for homeowners, curb executive pay at companies that unload toxic assets, and have the government receive stakes in such firms.

Stocks tumbled on Monday amid prospects that the debate could drag into next week and worries that the plan may not be enough to revive the economy.

(Source: Reuters)