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(AP) - The Bush administration rushed to revamp the
largest U.S. bailout plan in history Monday, working with
executives of the nation's biggest banks to shift and shape new
pieces and get desperately needed credit flowing.

 Stocks soared
around the world in response to dramatic efforts here and overseas
- and the possibility of even bolder American action.

      Scrambling to catch up with events, Treasury Secretary Henry
Paulson, Federal Reserve Chairman Ben Bernanke and the bankers were
modeling many parts of their revamped program after strong
initiatives in Europe, where governments put $2.3 trillion on the
line Monday in guarantees and other emergency measures to save
banks there.


      Elements being considered for the overhauled U.S. program
included not only the details for purchasing banks' bad assets -
the major feature of the $700 billion bailout bill that sped
through Congress - but also direct government purchases of stock in
banks, an idea that Paulson surfaced only last week.


      Another initiative under consideration: providing government
guarantees for the short-term loans banks make to each other, a
vital credit avenue that has come under severe stress as fears have
mounted over the hundreds of billions of dollars of losses that
began with the meltdown of the subprime mortgage market in the
United States more than a year ago.


      Major stock markets around the world surged higher after last
week's market disaster as traders began to hear of Europe's actions
and the possibility of further steps in the United States.


      On Wall Street, a record 936-point increase in the Dow Jones
industrials far surpassed the previous one-day mark of 499 points,
set in the waning days of the dot-com boom in 2000. But the surge
came after the staggering losses of the worst week ever, and
economists said more rough days can be expected. 


European markets
rallied following Asia's lead in response to the widespread
government initiatives.


      "These are tough times for our economies, yet we can be
confident that we can work our way through these challenges and
America will continue to work closely with the other nations to
coordinate our response to this global financial crisis,"
President Bush said following a meeting with Italian Premier Silvio
Berlusconi at the White House.


      Over the weekend, Paulson had called the heads of the five
biggest U.S. banks to come to Washington for face-to-face talks
about the rescue plan, according to people briefed on the matter.


      Goldman Sachs CEO Lloyd Blankfein, Morgan Stanley CEO John Mack,
Citigroup CEO Vikram Pandit, JPMorgan Chase & Co. CEO Jamie Dimon
and Bank of America Corp. CEO Kenneth Lewis were all asked to
attend, and there was a possibility that CEOs from some major
regional banks would also participate.


      Democrats in Congress, while supportive of Paulson's desire to
expand the program, complained that not enough strings were being
attached, such as restricting excessive compensation for Wall
Street executives who raked in millions of dollars in bonuses by
pursuing risky investment strategies that have now helped push the
U.S. financial system to the brink.


      The government should purchase only stock in financial firms
that agree to cut dividends paid to shareholders, adhere to strict
limits on executive compensation and curb their use of exotic
investment strategies, Sen. Charles Schumer, D-N.Y., chairman of
the Joint Economic Committee, said Monday.


      Separately, House Republicans and Democrats pushed for fresh
action to stimulate the faltering economy.


      Democrats scheduled hearings to consider a postelection stimulus
package that could cost as much as $150 billion. Republicans called
for more tax cuts and energy exploration.


      In a campaign speech in Ohio, Democrat Barack Obama proposed a
90-day moratorium on home foreclosures at some banks and a two-year
tax break for businesses that create new jobs. Republican John
McCain promised a change in direction from the Bush
administration's economic policies.


      As for the Europeans, governments there said they were putting
$2.3 trillion on the line, based on pledges from Britain, Germany,
France, Spain, Austria and Portugal in recent days. 

To assist the
European banks, the Federal Reserve here announced Monday that it
was taking actions to assure enough U.S. dollars were available to
meet demand.


      "The government cannot just leave people on their own to be
buffeted about," said British Prime Minister Gordon Brown.


      The $700 billion bailout bill was passed by Congress on Oct. 3.
In the past 10 days, the administration has hurried to get it
implemented even as officials have struggled to nail down the broad
outlines of how the package will work.


      The administration on Monday announced the selection of a team
of interim managers, picked an outside firm to help run the program
and selected a prominent New York law firm to draw up guidelines
for how the stock purchase program will work. Officials also
announced that Bernanke had agreed to serve as chairman of the
oversight board Congress mandated.


      Assistant Treasury Secretary Neel Kashkari, who was tapped by
Paulson to be interim head of the program a week ago, said that the
firm of Simpson Thatcher & Bartlett LLP had been chosen to work on
guidelines on stock purchases while the investment consultancy of
Ennis Knupp & Associates had been picked to help supervise the
selection of the program's private asset managers.


      "We are moving quickly - but methodically - and I am confident
we are building the foundation for a strong, decisive and effective
program," Kashkari said in a speech to the Institute of
International Bankers.


      He said seven policy teams had been set up at Treasury to focus
on different aspects of the program while five veteran government
officials had been chosen as interim heads of key areas including
Tom Bloom, currently the chief financial officer at the Office of
the Comptroller of the Currency, to serve as the chief financial
officer for the rescue program.


      Kashkari said that 70 companies had made bids to become the
master custodian firm and that a final selection of the winning
firm would be announced by Tuesday. 


More than 100 companies had
submitted bids to become one of the five to 10 firms that will
operate the program to buy and manage the bad assets from financial
firms, and those selections will quickly follow, Kashkari said.
    

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Business and Economic News

The Bush administration rushed to revamp the
largest U.S. bailout plan in history Monday, working with executives of the nation's biggest banks to shift and shape new pieces and get desperately needed credit flowing.

US, bankers rework bailout plan

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