WASHINGTON, Sept 20: US administration officials and lawmakers held urgent negotiations on Saturday on an unprecedented 700-billion-dollar plan to rescue the financial sector from the worst crisis since the Great Depression.

The plan sent to Congress late Friday by President George W. Bush’s administration would give Treasury Secretary Henry Paulson sweeping authority over the next two years to buy up to $700 billion of tainted mortgage-related assets to stem the grave financial crisis, according to a draft of the proposal.

“This is a big package because it was a big problem,” Bush told reporters on Saturday.

Speaking after his administration sent details of the bailout plan to members of Congress after a week of crisis in financial markets, Bush said decisive action was needed and that the government would eventually make back the rescue money.

“I will tell our citizens and continue to remind them that the risk of doing nothing far outweighs the risk of the package,” Bush said.

“And that over time, we’re going to get a lot of the money back,” he said.

The president underscored the urgency of the bailout, which congressional and administration officials -- including Paulson -- planned to hammer out through the weekend.

“The government needed to send a clear signal that we understood the instability can ripple throughout and affect the working people and the average family, and we weren’t going to let that happen,” Bush said.

The financial crisis comes in the heat of a tight presidential election race and as Democrats battle to bolster their narrow majority in Congress.

Neither Democrat Barack Obama nor Republican John McCain had any immediate response to the proposed rescue.

Democratic leaders of Congress signalled they were ready for prompt action but voiced concern about safeguards for taxpayers and vulnerable homeowners.

“This is a good foundation of a plan that can stabilise markets quickly,” said Senator Charles Schumer of New York. “But it includes no visible protection for taxpayers or homeowners. We look forward to talking to treasury to see what, if anything, they have in mind in these two areas,” Schumer said in a statement.

The White House bailout plan allows for an increase in the public debt limit, to $11.3 trillion, and grants the Treasury secretary powers to buy, sell and hold residential and commercial mortgages as well as securities based on those mortgages, according to the draft proposal posted on the New York Times’ website.

The extraordinary authority would expire in two years but would permit the government to hold the assets purchased for as long as the Treasury Department believes, is necessary.

The rescue calls for the purchase of assets only from US-based firms and grants the Treasury Department legal immunity from any lawsuits as part of the bailout proposal.

It remained unclear how the government would manage the assets it buys. But Paulson would have authority to turn to private financial institutions to carry out the operation or create other bodies to purchase mortgage assets and issue debt.

US authorities were scrambling to muster a frontal assault on the escalating 14-month-old credit crunch stemming from a meltdown in US home prices after a frenzied boom fuelled by easy credit.—AFP