Treasury asks for $700 billion to buy bad mortgages

The Treasury Department is asking Congress to provide up to $700 billion to allow the federal government to buy up bad mortgages, according to a draft legislative proposal obtained by The Hill Saturday. 

{mosads}In addition, the plan would raise the ceiling of the national debt from $10.6 trillion to $11.3 trillion to give federal regulators some space to maneuver as they undertake the massive rescue effort of the financial markets.

The proposal would also greatly widen the Treasury Department’s authority in order to right the markets, which have been rocked by the troubles of some of Wall Street’s biggest names.

The draft comes as lawmakers prepare to vote next week on a relief effort to resolve the Wall Street crisis before adjourning to return home and campaign for reelection this November.

Senior Democrats have been in negotiations with Treasury Secretary Hank Paulson and Ben Bernanke on how to best move forward. Many may seek to add provisions to the relief plan, such as a renewable energy tax credit, more funds for food stamps, and an extension of unemployment benefits.