WASHINGTON - The Bush administration formally asked Congress yesterday to grant sweeping new powers to the Treasury secretary to buy as much as $700 billion in deeply troubled mortgage-related assets as part of a Herculean effort to clean up Wall Street's financial crisis.
A draft of the plan was delivered to Congress early yesterday, and lawmakers will spend the weekend poring over it. As written, Treasury Secretary Henry M. Paulson Jr. and his successor would be handed expansive authority, beyond the reach of U.S. courts, to attempt to rescue staggering financial markets.
At the White House, President Bush acknowledged the immensity of the plan, which would bypass many of the traditional checks and balances of government.
"This is a big package, because it was a big problem," Bush said in the Oval Office as he met yesterday with the president of Colombia. "I will tell our citizens and continue to remind them that the risk of doing nothing far outweighs the risk of the package, and that, over time, we're going to get a lot of the money back."
Bush and his administration hope the bill moves smoothly through Congress, but potential obstacles were becoming apparent early yesterday. Democrats have asked that the administration plan include measures to address the root of the financial crisis: the housing bubble burst that fueled a wave of foreclosures around the country.
"This is a good foundation of a plan that can stabilize markets quickly. But it includes no visible protection for taxpayers or homeowners," said Sen. Charles E. Schumer, a Democrat from New York and chairman of Congress' Joint Economic Committee. "We look forward to talking to Treasury to see what, if anything, they have in mind in these two areas."
The new powers, which would expire after two years, would require the Treasury secretary to put equal weight on the welfare of the taxpayer as well as Wall Street in using the extraordinary authority.
"In exercising the authorities granted in this act, the secretary shall take into consideration means for (1) providing stability or preventing disruption to the financial markets or banking system; and (2) protecting the taxpayer," the draft says.
The powers granted under the law also would be difficult to challenge. The new authorities "may not be reviewed by any court of law or any administrative agency," although the Treasury secretary would be required to report to Congress on how he was exercising them.
The proposed legislation would raise the government's debt ceiling to $11.3 trillion.
A $700 billion expenditure on distressed mortgage-related assets would be roughly what the country has spent in direct costs on the Iraq war and more than the Pentagon's total yearly budget appropriation. It represents more than $2,000 for every man, woman and child in the United States.
The plan gives the secretary full discretion to use the powers as he sees fit in hiring employees or forming agencies to carry them out.
Congress has pledged to move swiftly to stabilize the financial markets, which were succumbing to panic last week. The Dow Jones industrial average fell to its lowest level in almost three years as giant financial institutions teetered on the verge of collapse and global credit markets seized up as banks hoarded their cash.
Bush stressed that the sweeping solution was necessary.
"My first instinct wasn't to lay out a huge government plan. My first instinct was to let the market work until I realized, upon being briefed by the experts, of how significant this problem became," Bush said. "And so I decided to act and act boldly.
"The American people have got to know that I made this decision, along with a lot of experts, because it was necessary to protect them. In the long run, we're going to be fine," Bush said.
The plan unveiled yesterday was developed by Paulson and Federal Reserve Chairman Ben S. Bernanke, who spent much of their day Friday on the phone pleading for speedy action by Congress. Lawmakers who spoke with them in those calls said the pair presented a sobering picture of just how fragile financial markets have become.
"All of us are prepared to do whatever we can this weekend ... to fashion a proposal that will get us out of this mess," said Sen. Christopher J. Dodd, a Connecticut Democrat and chairman of the Senate Banking Committee, who was expected to shepherd the plan through the Senate. "We understand the gravity of the moment."
Beneath the surface, however, questions about the administration's approach were raised even before the plan was unveiled. And, with the Nov. 4 presidential election only weeks away, political tensions inevitably arose as well.
On Capitol Hill, Republicans denounced the move away from free-market principles.
"At this point, Congress is being asked to support an uncertain entity, costing an uncertain amount of dollars, for an uncertain duration - a decision that will have implications for generations to come and requires absolute certainty," said Rep. Jeb Hensarling, a Texas Republican and leader of House conservatives.
"My fear is that taxpayers will be left with the mother of all debts."
Meanwhile, Democrats charged that the White House plan would offer too much help to financial companies that bet big on risky mortgage investments, and not enough to people losing their homes to foreclosure.
They expressed irritation with what they described as Paulson's insistence that Congress approve the administration proposal "clean," without any aid for troubled homeowners or regulations aimed at preventing a repeat of the current disaster.
Even policy analysts who generally are not averse to government intervention in the economy seemed taken aback by the apparent scale and aggressiveness of what the administration and the Fed have in mind. Robert E. Litan, a Treasury official with the Clinton administration who is a senior analyst with the Brookings Institution, said the new plan seemed to invite banks and securities companies to dump their very worst assets on the government with no clear way to get rid of them.
"What they're going to get is the financial equivalent of radioactive waste," he warned.
In Florida, Sen. Barack Obama of Illinois, the Democratic presidential nominee, said he would press for a broader economic stimulus initiative to be part of the bailout plan for financial firms.
Aides said Obama was still reviewing the administration's proposal. But in Daytona Beach, Fla., he told voters, "We have to make sure that whatever plan our government comes up with works not just for Wall Street, but for Main Street."
He added: "We have to make sure it helps folks cope with rising prices, and sparks job creation, and helps homeowners stay in their homes. That's the kind of help folks need right now."
Mindful of such sentiments, not just by Obama but by his rival, Sen. John McCain of Arizona and other Republicans, Paulson and Bernanke held a series of conference calls with members of Congress on Friday to begin selling them on the proposal, and to assure them that action was needed not just to help Wall Street but everyday Americans as well.
They emphasized that the risk of steep declines in worldwide markets posed a grave risk to all Americans, especially their retirement plans and college savings for children but also their access to consumer credit, including auto loans.
Bernanke, for instance, pointed out that many Americans have savings invested in money market funds, which were at risk of unexpected losses.
Even as congressional staff members began to scour the proposal, a host of questions remained.
One of the few limitations set forth in the plan would limit the Treasury's ability to buy mortgage-related assets only "from any financial institution having its headquarters in the United States."
That would seem to preclude the administration from buying assets from firms like UBS, the giant Swiss bank, which has a huge stake in American mortgage-backed securities.
The New York Times contributed to this article.