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$700 billion question: fate of bad loans

Debate rages around Treasury plan

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The Bush administration's plan to allow the Treasury Department to buy up to $700 billion in troubled mortgage-related assets could help thaw the credit crunch by helping big financial firms move bad loans off their books. But critics of the plan want the government to provide more protections for taxpayers and help for individuals struggling with their mortgage payments -- goals that may be inherently contradictory. The battle that's shaping up in Congress over the plan isn't expected to derail it, but the debate over its particulars could complicate or delay its implementation, as lawmakers must authorize the issuance of the Treasury securities that would finance it. While the plan put forward by Treasury Secretary Henry Paulson on Saturday seems simple enough on its face, the details of how it is implemented could have profound implications for the hardest-hit housing markets and the plan's ultimate cost to taxpayers. Once taxpayers are in charge of these assets, will t...