Washington Debates Financial Bailout

NEW YORK (AP) - A sweeping government proposal to buy up to 700
billion dollars in bad mortgages may not be enough for all banks
teetering on the brink of failure.
Experts say a critical issue will be how much the government
actually pays for the troubled assets. How it'll all work is still
being worked out by lawmakers and the Bush administration.
Treasury Secretary Henry Paulson says one approach could ask
financial institutions to propose a price for their mortgage-backed
securities and the government would choose the lowest bids. If
banks sell at the proposed price -- say 50 cents on the dollar --
accounting rules would require firms to take the losses on their
balance sheets before scrubbing their books of damaged assets.
Weaker banks could take such a big hit they may not be able to stay
afloat.
The Federal Deposit Insurance Corporation says over 100 banks
are in danger of failing.
The International Monetary Fund says losses from the mortgage
mess could top a trillion dollars.