SOUTH BEND — It's the biggest proposed intervention in the country's financial markets since the Great Depression. But will the government's unprecedented takeover of Wall Street investment banks finally help turn the struggling economy around?

The Bush administration outlined a multi-part plan Friday aimed at preventing Wall Street from collapsing. It involves buying up nearly all outstanding debt from some of the biggest investment firms in the world, insuring money market mutual funds, and imposing strict guidelines of "short selling" on the floor of the New York Stock Exchange.

That means an end to Wall Street "bets" that a stock will go down.

Some estimate the cost of this latest bailout at up to half a trillion dollars.
Will the plan work or are taxpayers on the hook for a major loss? Experts say it's clear there is a huge element of risk involved in backing the debt.

President Bush Friday said the risk of doing nothing is much greater.

"Given the precarious state of today's financial markets and their vital importance to the daily lives of the American people, government intervention is not only warranted, it is essential," Mr. Bush said.

If it doesn't come soon, some experts say the nation could face the second biggest financial crisis in world history, behind only the Great Depression of the 1930s.

So, how did things get so bad, so quickly? The answer, say experts, is that it didn't.

"We've basically had 30 years of deregulation of the financial industry," said Notre Dame Finance Professor Dr. Richard Sheehan. "There's a lot of good that's come of that. But, there's also a lot of bad. The result we're seeing now is 30 years of the chickens coming home to roost."

It seems they've all arrived at once.

"The deregulation we've seen has allowed Fannie Mae, Freddie Mac, Lehman Brothers and Bear Stearns all to do things that 20, 30 years ago they wouldn't have been able to do," said Sheehan.

That includes getting into deep debt. But it didn't have to be that way.

"Could this have been prevented? Absolutely," said U.S. Representative Joe Donnelly (D-2nd District). "The proper regulation some years ago would have prevented this from ever happening. There's no questions mistakes were made."

And on that, it seems there's little disagreement.

"I think there were a lot of mistakes made along the way," agreed Donnelly's November challenger Luke Puckett (R-LaPorte).

But that hasn't stopped the finger pointing on Capitol Hill.

"There's enough fault for a lot of people to take the blame," said Dr. Sheehan.

Regardless of who started it, how can it be brought to an end?

As the mortgage mess and credit crunch continue to fuel signs of an economic collapse, the answer appears to be, that the investment firms can't get out on their own.

The problem is, banks have stopped lending, both to customers, and to each other, because there's no trust that they'll be paid back.

That's why Uncle Sam is stepping in, hoping to restore confidence by buying up the bad loans, so the investment banks can begin lending again.

Doing that will require billions of dollars in funding. And even if the deals go through, finding buyers for the new government backed "bad mortgage loans" will be tricky.

Even so, most experts say, the government has no other choice.

"The cost of inactivity and inaction was much worse than the cost of stepping in and getting this fixed," said Rep. Donnelly.

The question now, is how to do it. So far, the answer is still unclear. There's no shortage of theories out there, though.

"Whatever it is, it should come with some very, very strong strings attached," said Sheehan.

"The goal is protect the citizens of this country, and put common sense regulatory process in place that works," said Donnelly.

"We want to make people feel comfortable about the economy," agreed Puckett.

What they don't agree on, is what the move will mean for the root of the real problem: America's still struggling housing market.

Some say it's the rescue plan is the boost we've been waiting for.

"What this will do is enable families to have a mortgage that makes sense, that they can pay every month at a reasonable rate, keep their home, and provide additional stability to our housing system," said Donnelly.

Others aren't so sure.

"I would be much less optimistic there," said Sheehan. "That doesn't have a whole lot of impact on what goes on in neighborhoods here in South Bend in terms of mortgage markets."

Then there's the fine details of the rescue plan itself.

Everyone seems to agree it should put solid financial backing behind things like your retirement and pension funds. No one's quite sure how to get there.

"Let's give the assistance. Then, we back away and allow the private sector to once again step in," said Puckett. "We do not want to get into anything that looks like a socialized or nationalized economy."

But Donnelly says it's clear the private sector hasn't been able to regulate itself, and without new, strict monitoring, Puckett's plan wouldn't work.

"Those are the same people that said we shouldn't be putting any regulation in. And that lack of regulation led to this problem," Donnelly said.

There is one thing everyone seems to agree on: whoever is to blame, however it's done, there is only one option left:

"Getting this fixed, and getting it right," said Donnelly.

We won't know exactly what it will take to do that for at least another few days.

Treasury Department Secretary Henry Paulson has vowed to work with Congressional leaders to formulate a final plan this weekend.

After that, it will be up to Congress to decide what happens next.