Bailout a mystery with lots of questions

Among the unanswered questions: How will the government mop up the bad mortgage debt on banks' books, who will run the process and how much will it cost?

Key elements of the plan remain in flux as behind closed doors Democrats demand modifications that would provide more help for ordinary Americans in return for bailing out the country's financial giants.

In the spare, three-page draft legislation that the Treasury provided lawmakers on Saturday, the administration's plan seemed straight forward enough.

The Treasury asked for $700 billion which it proposes to spend over the next two years to purchase what Treasury calls "troubled assets" from financial institutions including banks, thrifts, credit unions, broker-dealers and insurance companies.

The assets are defined as residential and commercial mortgages and any securities based on those mortgages if the debt was issued before last Thursday.

The Treasury's first draft said that only mortgage-related assets would be purchased. But in a later version the Treasury secretary asked for the power, after consulting with the chairman of the Federal Reserve, to expand purchases to troubled assets beyond real estate if both officials determine such purchases are necessary to promote market stability.

That would conceivably leave taxpayers picking up the tab on things like bad car loans and credit card debt. The Treasury will likely focus virtually all of its attention on the mountain of bad mortgage debt, however, since that is at the heart of the 14-month long credit crisis.

How would the purchase of this bad debt work? Again, the Treasury draft legislation leaves a lot to the imagination. But Treasury officials have talked about employing a "reverse auction."

Under the process, the Treasury would advertise an auction, seeking to buy, for example, $1 billion of subprime mortgage loans that were originated around the same time.