Bernanke, Paulson Seek Big-Government Bailout

bloomberg.com — Ben S. Bernanke and Henry Paulson are under pressure to embrace the big-government policies of America in the 1930s, or Sweden in the 1990s, to contain the conflagration engulfing the U.S. housing and financial markets. Among the ideas: Using taxpayer money to shore up the capital of loss-ridden Fannie Mae and Freddie Mac, setting up new agencies to buy and refinance mortgages in default, even taking over failing financial institutions. Trying to envision what steps Washington might have to take, economists hearken back to the last time the country faced a nationwide decline in house prices, during the Great Depression.

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