US Government Financial Bailout Plan to Cost $700 Billion

The Bush administration is asking Congress for $700 billion for a major financial intervention plan aimed at easing global economic turmoil.

In his weekly radio address Saturday, President Bush said government intervention in this case is essential because of the risk the crisis in financial markets poses to ordinary American citizens.

The plan calls for the government to purchase bad debt - such as mortgages that can not be paid back - from U.S. financial institutions, which have lost money after making risky loans.

Mr. Bush says the program requires putting a lot of taxpayer's money at risk, but he said doing so will cost less than doing nothing.

Democratic presidential nominee Barack Obama says he supports the efforts of Bush administration officials in charge of the rescue plan - Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. In his party's radio address, Senator Obama said they should find a solution that helps people cope with rising gas and food prices, and that encourages job creation.

Democrats and Republicans in Congress have agreed to the broad outline of the program. They are meeting in Washington to work out details.

After news that a bailout plan was being developed, stock markets around the world recovered much of what was lost earlier in the week. Market analysts said the plan to remove bad loans from the financial system calmed market fears about the future of the economy.

Markets plunged Monday when Lehman Brothers, a major investment bank, was allowed to collapse. Later in the week, the U.S. Federal Reserve gave an $85 billion loan to bail out American International Group (AIG) the world's largest insurance company. AIG nearly collapsed after major losses in the housing crisis.

U.S. officials say millions of U.S. mortgage loans are in default or foreclosure. When homeowners can not repay their loans, it damages lenders and investments based on mortgages.

Some information for this report was provided by AFP, AP and Reuters.