The Dow Jones Industrial Average (DJIA) jumped about 400 points this afternoon on the breaking news that Treasury Secretary Henry Paulson has been floating the idea to Congressional leaders of an entity simliar to the Resolution Trust Corporation (RTC) to buy up bad subprime mortgage debt and place a floor on the present spreading liquidity crisis. The RTC was created in the late 1980′s to clean up the mess created by the Savings & Loan banking crisis. The leak of Paulson’s RTC comments places pressure on congressional Democrats to focus on legislation to help staunch the crisis.
Just today, Democratic Senate Leader Harry Reid and Speaker of the House Nancy Pelosi announced that they favored adjorning Congress as without any legislative action because as Reid put it, “no one knows what to do”. With McCain’s announcement of an RTC-like solution he called the MFI Trust, and the leak of the Paulson entreaties to the Democratic Congress to act, Democrats will have to decide whether to cooperate with the Treasury and act now or adjourn and hope that voters don’t notice the inaction but instead focus on Obama’s heralding of the continuing economic malaise.
