Please turn on JavaScript. Media requires JavaScript to play. US President George W Bush has defended a rescue package to tackle the worst financial markets crisis for decades. The cost to taxpayers of shoring up markets was better than the alternative of job losses and diminished pensions, he said in his weekly radio address. The US Treasury is proposing a fund worth up to $700bn (£382bn) to buy back much of the bad debt held by banks and other financial institutions. The fund would aim to sell off these mortgage-related debts in the future. Mr Bush said the measures required the US "to put a significant amount of taxpayer dollars on the line". "But I'm convinced that this bold approach will cost American families far less than the alternative," he said. "Further stress on our financial markets would cause massive job losses, devastate retirement accounts, further erode housing values, and dry up new loans for homes, cars and college tuitions." 'Devil in the detail' Congressional and Treasury officials have been meeting over the weekend and the package is expected to be signed into law within days. New laws will soon to be passed to free US banks from loans they cannot sell The US Treasury has revealed little detail of its ambitious package, other than the estimated cost of buying these bad debts and who is eligible for the scheme. Treasury Secretary Henry Paulson has asked for congressional approval to raise the amount the government can borrow to $11.3 trillion (from $10.6 trillion) to cover that cost. The bailout is only open to financial institutions with "significant operations in the US", unless the Mr Paulson's team decides otherwise, according to the Treasury's draft plan. The BBC's business editor Robert Peston said the devil will be in the detail, for example, how much the Treasury will pay for the banks' toxic assets. "There is an argument that Paulson should pay a discount to the market price, to protect US taxpayers and soundly spank the banks and their owners," our correspondent says. But such a move would further deplete banks' resources and "further undermine their ability to lend to the rest of us", he adds. It is believed the intention is to find a way of bringing all the bad debts into one organisation whose task will be to hold them on behalf of the taxpayer until they can be sold off at some point in the distant future, says the BBC's Justin Webb in Washington. 'Queasy Congress' There are some members of Congress who are queasy at the thought of the taxpayer taking on hundreds of billions of dollars of currently worthless debt, he says. But the leader of the Democrats in the House of Representatives, Steney Hoyer, said he expected quick action. After a week of turmoil, stock markets around the world rallied on news of the rescue plan, with the UK's FTSE 100 closing on Friday with its biggest one-day gain. Earlier, Mr Bush said swift, politically bipartisan action was needed to keep the US economy from grinding to a halt as problems sparked by the credit crisis had begun to spread through the entire financial system. PESTON'S PICKS For us here in the UK the big question is whether what Paulson's proposing makes it more or less likely that our government will have to launch a similar rescue scheme for our banks



Read Robert's thoughts in full The US Treasury Secretary said a "bold" move was needed to restore the financial system's health. The programme, he said, must be "large enough to have maximum impact". In the meantime, he said that the government would be stepping up action to increase the availability of capital for new home loans. Once this difficult period was over, Mr Paulson said, the government's next task would be to overhaul bank regulations. 'New economy' The UK Prime Minister said one of the lessons that of the global financial crisis is the need for international regulation to be brought up to date. Gordon Brown, speaking on the BBC's Andrew Marr show, said: "We're in a new economy, a global financial economy, the world is changing very fast, but the governance of the global financial system has not caught up with it and that's what's got to change." On Friday, the US government announced plans to guarantee US money market funds - mutual funds that typically invest in low-risk credit such as government bonds and are often used by pension funds - up to a value of $50bn, in a move to further restore confidence. The Treasury and the Fed have finally realised the depth and systemic nature of the crisis

John Ryding, economist

Who's to blame for the crisis? Will the plan work? McCain attacks bank assistance Meanwhile, the Securities and Exchange Commission temporarily banned "short-selling" in the stocks of 799 companies. Short-selling is a form of trading which effectively bets that the value of a company's shares will fall. "The Treasury and the Fed have finally realised the depth and systemic nature of the crisis," said John Ryding, an economist at RDQ Economics "We believe that these actions will constitute the wider firebreak that will contain the crisis." Mounting fears that the credit crisis is beginning to spread out through the financial system have rocked shares and companies recently. Investment giant Lehman Brothers collapsed this week, rival Merrill Lynch was bought out by Bank of America, and the US government has bailed out insurer AIG with an $85bn rescue package and state-backed mortgage lenders Fannie Mae and Freddie Mac.



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