WASHINGTON – Conservatives in Congress aren't too happy about the size, scope and approach of the federal rescue plan that would inject billions of taxpayer dollars into the flailing economy.
"Crisis is a term that is used far too often in Washington, but this is one of the few times that I believe those using it," Rep. Jeb Hensarling, a Texas Republican, said Friday in a written statement. "At such a critical moment for our nation, careful, sober, and thoughtful reflection and rhetoric is required."
Hensarling is head of the Republican Study Committee, known as one of the most conservative blocs of Republicans in the House. The group plans to hold a phone conference Saturday to lay out their concerns about the rescue plan.
"We are told that this is a choice between the lesser of two evils," Hensarling said. "If that is the case, I believe that we have an obligation to safeguard taxpayers above all else. Needless to say, though my mind remains open, at the moment I remain skeptical, fearful, and unconvinced that this is the proper remedy for our nation at this time."
President Bush and Treasury Secretary Henry Paulson warned Friday that everything from retirement savings to home values are at risk if the administration and lawmakers do not act quickly. They want the government to be able to take over worthless mortgages from banks and other financial institutions.
“We’re talking hundreds of billions (of dollars)," Paulson said when asked how high the price tag could run. "This needs to be big enough to make a real difference and get to the heart of the problem.”
The White House was expected to hand in a draft proposal to Congress by Friday night, a Democratic leadership aide told FOX News. Congressional officials said they expected a request with a cost in excess of $500 billion to the government.
The administration wants to see a package emerge from the weekend, to lend calm to Monday morning's market openings, said Keith Hennessey, the director of the president's economic council.
But the package may face opposition from Hensarling and his conservative colleagues in Congress.
"At this point, Congress is being asked to support an uncertain entity, costing an uncertain amount of dollars, for an uncertain duration," he said. "My fear is that taxpayers will be left with the mother of all debts, the federal government becomes the lender and guarantor of last resort, and our nation finds itself on the slippery slope to socialism."
Paulson and Bush spoke after the federal government announced several short-term measures to stem the worst financial crisis in decades.
The government on Friday said it would safeguard assets in money market mutual funds and temporarily banned short-selling financial company stocks. The Treasury Department has asked Congress to give it sweeping power to buy up toxic debt that has unhinged Wall Street.
Bush authorized Treasury to tap up to $50 billion from a Depression-era fund to insure the holdings of eligible money market mutual funds. And the Federal Reserve announced it will expand its emergency lending program to help support the $2 trillion in assets of the funds.
Paulson said mortgage giants Fannie Mae and Freddie Mac will also step up their purchases of mortgage-backed securities to help provide support to the crippled housing market.
He also said the Treasury Department will expand a program, announced earlier this month, to buy mortgage-backed securities, which have been badly hurt by the housing and credit crises.
The Fed said it is expanding its emergency lending efforts to allow commercial banks to finance purchases of asset-backed paper from money market funds. The central bank should help the funds meet demands for redemptions.
The Securities and Exchange Commission early Friday imposed the temporary emergency ban on short-selling financial company stocks, a trading method that bets the stocks will go down. As the financial crisis widened, entreaties had come from all quarters to stem a swarm of short-selling contributing to the collapse of stock values in investment and commercial banks.
The roots of the current crisis can be traced to lax lending for home mortgages — especially subprime loans given to borrowers with tarnished credit — during the housing boom. Lenders and borrowers were counting on home prices to keep zooming upward.
But when the housing market went bust, home prices plummeted. Foreclosures spiked as people were left owing more on their mortgage than their homes were worth. Rising mortgage rates also clobbered some homeowners.
As financial companies racked up multibillion-dollar losses on soured mortgage investments, and credit problems spread globally, firms hoarded cash and clamped down on lending. That crimped consumer and business spending, dragging down the national economy — a vicious cycle policymakers have been trying to break.
The Associated Press contributed to this report.