U.S. government seeks approval for $700B financial bailout

The Bush administration is asking Congress to approve a plan to buy back faltering mortgages at a cost of about $700 billion US.

Proposal would raise U.S. debt limit to $11.3 trillion

The bailout of the U.S. banking industry would cost an estimated $700 billion US, according to a draft of the proposal.

U.S. President George W. Bush, seen in this photo with Colombian President Alvaro Uribe in the background, said the problem with mortgage assets won't be confined to just the financial community. ((Haraz N. Ghanbari/Associated Press))

Analysts earlier predicted that the plan to stem losses from faltering mortgage assets would cost anywhere from $500 billion to $1 trillion.

Congressional committees were to be briefed on the legislative proposal on Saturday. The House of Representatives and Senate will examine it as early as next week.

A copy of the draft legislation shows it would give the government broad power to buy the bad debt of any U.S. financial institutions for the next two years.

It also would raise the statutory limit on the national debt from $10.6 trillion to $11.3 trillion, making room for the massive rescue.

The proposal does not specify what the government would get in return from financial companies for the federal help.

Bush, speaking to reporters after a White House meeting with Colombian President Alvaro Uribe, said he has asked Congress to quickly pass the legislation.

Approval of the rescue package is vital to contain the financial crisis and prevent it from spreading to the average American, Bush said.

"This is Wall Street plus Main Street, and I'm worried about Main Street," he said in a message he repeated in his weekly radio address Saturday.

"These measures require us to put a significant amount of taxpayer dollars on the line, but I'm convinced that this bold approach will cost American families far less than the alternative.

"Further stress on our financial markets would cause massive job losses, devastate retirement accounts, further erode housing values and dry up new loans for homes, cars and college tuitions."

Administration officials and members of Congress were to negotiate throughout the weekend. The White House and congressional leaders hope the legislation could pass as early as next week.

With files from the Associated Press