Congressional leaders from both parties sounded a receptive note on Sunday to Treasury Secretary Henry Paulson’s proposal for the government to inject capital directly into the nation’s banks.
“I think he'll use all of those options including some kind of guarantee that people who own these assets can reach a floor, buying these assets at the right level and some direct involvement,” House Minority Whip Roy Blunt (R-Mo.) said on ABC’s “This Week.”
House Financial Services Committee Chairman Barney Frank (D-Mass.) agreed.
“I think that is a very important piece of it,” he said.
James Baker III, who served as Treasury secretary in the Reagan administration, said he also supported the plan, which would give the federal government partial ownership of the nation’s banks.
“This is bigger than the private sector can fix itself. Government will have to do what's necessary to restore stability,” Baker said.
But New Jersey Gov. Jon Corzine (D) called the bank bailout a “horrible idea” and argued that “taxpayers would end up underwriting” the plan.
“What we need to do is restructure mortgages. There's a couple ways to do that — change the bankruptcy laws, or you could actually buy mortgages at their market value today and then go in and restructure them with the individuals,” Corzine said on NBC’s “Meet the Press.”
Meanwhile, Blunt said he was skeptical about whether Congress should return for a lame-duck session to take up an expanded economic stimulus plan, backed by House Democrats. The Democratic plan would include increased infrastructure spending and unemployment insurance.
And Blunt warned that Congress should not bail out states that “spent a lot more than money they should have on social programs.”
"I certainly will work on a stimulus package that makes sense. But let's not use the stimulus package as an excuse to do what Democrats have wanted to do from Day One of this Congress, which is a huge public works plan,” he said.