WASHINGTON –Saying that it was necessary to "stabilize the system and get at the root cause" of the current financial crisis, Treasury Secretary Henry Paulson said today that he and lawmakers will work through the weekend to iron out details of a bailout of the financial markets that could cost "hundreds of billions dollars."
He did not disclose details except to say that the plan must "remove these illiquid assets that are weighing down our financial institutions and threatening our economy."
While he expressed optimism that Congress would pass the as-yet-unfinished plan by next Friday, he announced that in the short term, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities and the Treasury Department its own MBS purchase program.
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Although the tumult in the financial markets has put a strain on consumer confidence, CUNA Senior Vice President of Research and Policy Analysis and Chief Economist Bill Hampel said their could be some bright spots.
"We are in the beginning of a consumer-led recession, and what is happening to the consumer is what is driving that, of course. But the Main Street effect of what is the one in Wall Street might be somewhat overstated," he told Bloomberg Television. "I'm not saying happy days are here again but some positives are building."
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