Congress mulls new asset agency

WASHINGTON, Sept. 17 (UPI) -- Congressional members said they are considering possibly creating a new U.S. agency to buy bad debt considered to be the center of Wall Street's woes.

Rep. Barney Frank, D-Mass., floated a trial balloon about creating an agency that would buy troubled assets from faltering companies, The New York Times reported Wednesday. Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi both indicated the idea had merit.

The proposal would resemble the Resolution Trust Corp., created in 1989 to dispose of bad assets held by hundreds of crippled savings institutions, the newspaper said.

"We have had a series of ad hoc interventions; this is one more ad hoc intervention," Frank said. "I do think, because you can't be sure this is the last one, the question of a broader more systemic action in which the government tries to help resolve these things is very important."

Federal officials helped bail out several ailing Wall Street institutions. In the case of Bear Stearns, the Fed took $29 billion of its mortgage-related assets as collateral for a Fed loan to JPMorgan Chase, which acquired Bear Stearns. For Fannie Mae and Freddie Mac, the Treasury Department placed the mortgage companies in a conservatorship, among other things. Federal officials did nothing for Lehman Brothers, which declared bankruptcy Monday, but agreed to loan AIG $85 billion to keep it afloat.

Supporters also include Lawrence Summers, Treasury secretary under President Clinton, and former Federal Reserve chairmen Paul A. Volcker and Alan Greenspan, The New York Times reported Wednesday.