"Following the defeat of the $700-billion bailout package on Monday, Rep. Jeb Hensarling (R-Texas), chairman of the Republican Study Committee, introduced a bill that he said relies on the free market rather than the federal government to solve the nation's financial problems. The RSC alternative would try to restore confidence in the mortgage market by insuring all such investments at 100 percent of their value.
"Under the plan, mortgages that Treasury officials deemed to be risky would be insured at a higher premium than mortgages considered stable. The mortgages would be insured by the federal government, i.e., tax dollars. Thus, the plan is not pure free market but is more reasonable than an outright federal purchase of the mortgages with tax dollars, suggested Hensarling."
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