WASHINGTON - The Bush administration is asking Congress to let the government buy $700 billion in toxic mortgages in the largest financial bailout since the Great Depression, according to a draft of the plan obtained Saturday by The Associated Press.

The plan would give the government broad power to buy the bad debt of any U.S. financial institution for the next two years. It would raise the statutory limit on the national debt from $10.6 trillion to $11.3 trillion to make room for the massive rescue. The proposal does not specify what the government would get in return from financial companies for the federal assistance.

'We're going to work with Congress to get a bill done quickly,' President Bush said at the White House. Without discussing details of the plan, he said, 'This is a big package because it was a big problem.'

The White House and congressional leaders are hoping the legislation, which is still being developed, could pass as early as next week.

Administration officials and members of Congress were to negotiate through the weekend. The plan is designed to let faltering financial institutions unload their distressed mortgage-related assets on the government, and in turn the taxpayer, in a bid to avoid dire economic consequences.

Bush said he worried the financial troubles 'could ripple throughout' the economy and affect average citizens. 'The risk of doing nothing far outweighs the risk of the package, and over time we're going to get a lot of the money back.'

He added, 'People are beginning to doubt our system, people were losing confidence, and I understand it's important to have confidence in our financial system.'

'In my judgment, based upon the advice of a lot of people who know how markets work, this problem wasn't going to be contained to just the financial community,' the president said. He said he was concerned about 'Main Street' and that what happens on 'Wall Street' affects 'Main Street.'

Sen. Chuck Schumer, D-N.Y., called the proposal 'a good foundation,' but raised concerns it 'includes no visible protection for taxpayers or homeowners.'

Democrats are insisting the rescue include mortgage help to let struggling homeowners avoid foreclosures. They also are also considering attaching additional middle-class assistance to the legislation despite a request from Bush to avoid adding controversial items that could delay action. An expansion of jobless benefits was one possibility.

Asked about the chances of adding such items, Bush sidestepped the question, saying only that now was not the time for political posturing. 'The cleaner the better,' he said about legislation he hopes Congress sends back to him at the White House.

If passed by Congress, the plan would give the Treasury secretary broad power to buy and sell the mortgage-related investments without any additional involvement by lawmakers. The proposal, however, would require that the congressional committees with oversight on budget, tax and financial services issues be briefed within three months of the government's first use of the rescue power, and every six months after that.

While the proposal contains no requirement that the government receive anything from banks in return for unloading their bad assets, it would allow the Treasury Department to designate financial institutions as 'agents of the government,' and mandate that they perform any 'reasonable duties' that might entail.

In a briefing to lawmakers Friday, Paulson and Federal Reserve Chairman Ben Bernanke painted a grave picture of an economy on the edge of a major recession and telling them that action was urgent and imperative.

In a session with House Democrats, they described a plan where the government would in essence set up reverse auctions, putting up money for a class of distressed assets '” such as loans that are delinquent but not in default '” and financial institutions would compete for how little they would accept for the investments, said Rep. Brad Sherman, D-Calif., who participated in the conference call.

'You give them good cash; they give you the worst of the worst,' Sherman said. A critic of the plan, he complained that Bush and his economic advisers were trying to panic lawmakers into rubber-stamping it.

Paulson said the new troubled-asset relief program must be large enough to have the necessary impact while protecting taxpayers as much as possible.

'I am convinced that this bold approach will cost American families far less than the alternative '” a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion,' Paulson said. 'The financial security of all Americans ... depends on our ability to restore our financial institutions to a sound footing.'

Administration officials hoped the rescue plan could be finalized this weekend, to lend calm to Monday morning's market openings, said Keith Hennessey, the director of the president's economic council. The goal is to have something passed by Congress by the end of next week, when lawmakers recess for the elections.

http://www.msnbc.msn.com/id/26803347