The Treasury Department has formally asked Congress to approve a $700 billion bailout of the financial industry and to create a government fund to buy illiquid assets from the nation’s banks. The Bush administration proposal could be the largest government bailout of private industry in the nation’s history. Some analysts say the final cost to taxpayers could top one trillion dollars. Over the weekend, the size of the proposed bailout grew as the Bush administration said foreign banks, including Barclays and UBS, should be eligible for the bailout. The Financial Times reports some industry groups are lobbying for the fund to grow even larger by including a clause that would allow banks to account for any losses realized over a number of years.

President Bush: “Our system of free enterprise rests on the conviction that the federal government should interfere in the marketplace only when necessary. 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.”

The Democratic leadership in Congress appears to back the bailout but are pushing to include provisions to protect homeowners, place constraints on excessive executive compensation, and to provide independent oversight of the fund. Under the Bush administration’s proposal, there would be no restrictions on the administration other than requiring semiannual reports to Congress. This would grant the Treasury secretary unprecedented power to buy and resell mortgage debt. Treasury Secretary Henry Paulson is opposing plans to help homeowners facing foreclosure as part of the bailout. Paulson said Congress should approve a so-called clean bill.

Henry Paulson: “The ultimate taxpayer protection will be the stability this troubled asset relief program provides to our financial system, even as it will involve a significant investment of taxpayer dollars. I am convinced that this bold approach will cost American families far less than the alternative — a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion.”

The era of investment banks appears to have ended. Goldman Sachs and Morgan Stanley, the last big independent investment banks on Wall Street, are transforming themselves into bank holding companies subject to far greater regulation.

On the campaign trail, Senator Barack Obama criticized John McCain for his support of privately investing Social Security money in the same markets that tanked last week.

Sen. Barack Obama: “I know Senator McCain is talking about a 'casino culture' on Wall Street, but the fact is, he’s the one who wants to gamble with your life savings, and that is not going to happen when I’m president of the United States. When I’m president, we’re not going to gamble with Social Security, we’re not going to gamble with your ability to retire with dignity after a lifetime of hard work; we’re going to strengthen and protect Social Security so it’s a safety net our families can count on today, tomorrow and always.”

John McCain defended his support of deregulating the financial industry. He was asked about his views last night on 60 Minutes.

Scott Pelley: “In 1999, you were one of the senators who helped pass deregulation of Wall Street. Do you regret that now?”

Sen. McCain: “No. I think the deregulation was probably helpful to the growth of our economy.”

In South Africa, Thabo Mbeki announced Sunday he is resigning as president of South Africa following allegations that he interfered in a corruption case against political rival and current African National Congress leader Jacob Zuma. On Saturday, the executive committee of the ANC demanded that Mbeki step down for meddling in the case against Zuma. Mbeki said he was agreeing to resign but denied the charges against him.

Thabo Mbeki: “I have been a loyal member of the African National Congress (ANC) for fifty-two years. I remain a member of the ANC and therefore respect its decisions. It is for this reason that I have taken the decision to resign as President of the Republic, following the decision of the National Executive Committee of the ANC.”

In 1997, Mbeki succeeded Nelson Mandela to become South Africa’s second post-apartheid president.

In Pakistan, at least fifty-three people died on Saturday after a massive explosion devastated the Marriott Hotel in Pakistan’s capital, Islamabad. Over 250 people were wounded. The explosion occurred when a truck packed with over 1,300 pounds of explosives rammed into the hotel. About a dozen foreigners were killed in the blast, including the Czech ambassador and two Pentagon employees. Officials say Pakistan’s president, prime minister and military chiefs were supposed to have been holding a meeting in the hotel at the time but they changed the venue of the meeting at the last minute. The attack is seen by many as a warning from Islamist militants over the Pakistani government’s cooperation with the United States. On Tuesday, Pakistan’s new President Asif Ali Zardari is scheduled to meet with President Bush.

Former President Jimmy Carter has called on the Georgia State Board of Pardons and Paroles to reverse its decision to deny clemency to Troy Davis who is scheduled to be executed on Tuesday. Since Davis was convicted of allegedly killing a police officer in 1991, seven of the nine non-police witnesses have recanted. No physical or DNA evidence ties Davis to the crime. Jimmy Carter said, “This case illustrates the deep flaws in the application of the death penalty in this country. Executing Troy Davis without a real examination of potentially exonerating evidence risks taking the life of an innocent man and would be a grave miscarriage of justice.” In Atlanta, Georgians for Alternatives to the Death Penalty and the NAACP are planning to hold a rally today in front of the State Capitol.
Georgia is planning to execute Davis on Tuesday, even though the US Supreme Court is scheduled to decide next week on whether to hear a last-minute appeal in his case.

A new study out of UCLA has concluded that ethnic violence — not the Bush administration’s surge — was the primary factor in reducing violence in Iraq. UCLA geographers studied how much light was being generated at night in different neighborhoods of Baghdad. Night light in neighborhoods populated primarily by embattled Sunni residents declined dramatically just before the February 2007 surge and never returned. Meanwhile, the use of lights at night remained constant or increased during the surge in largely Shiite neighborhoods. Co-author Thomas Gillespie said, “If the surge had truly 'worked,' we would expect to see a steady increase in night-light output over time. Instead, we found that the night-light signature diminished in only certain neighborhoods, and the pattern appears to be associated with ethno-sectarian violence and neighborhood ethnic cleansing.”

The city of St. Paul has announced charges will be dropped against journalists who were arrested during the Republican National Convention protests and cited with unlawful assembly. St. Paul Mayor Chris Coleman said Friday that the city attorney’s office recommended against prosecuting reporters for the misdemeanor charge. Over forty journalists were arrested or detained during the Republican Convention, including three of us at Democracy Now!: myself and producers Sharif Abdel Kouddous and Nicole Salazar.

Beginning in October, the Army plans to station an active unit inside the United States for the first time to serve as an on-call federal response in times of emergency. The 3rd Infantry Division’s 1st Brigade Combat Team has spent thirty-five of the last sixty months in Iraq, but now the unit is training for domestic operations. The unit will soon be under the day-to-day control of US Army North, the Army service component of Northern Command. The Army Times reports this new mission marks the first time an active unit has been given a dedicated assignment to Northern Command. The paper says the Army unit may be called upon to help with civil unrest and crowd control. The soldiers are learning to use so-called nonlethal weapons designed to subdue unruly or dangerous individuals and crowds.

Federal agents have arrested at least 200 people in immigration raids in Illinois, Indiana, Colorado and California over the past week. Most of the arrests took place in the Chicago area and northern Indiana. Beginning on Sept. 12, four ICE Fugitive Operations teams detained and arrested 144 people in nineteen towns in the region. Fifty-nine more immigrants were arrested in Colorado, where agents conducted raids in fourteen cities. In California, agents arrested twenty-one undocumented immigrants working at a chain of Chinese restaurants. Meanwhile, a new study by the Pew Hispanic Center has found that nearly one in ten Latinos in the United States reported that in the last year police or other authorities stopped them and asked them about their immigration status. Last year, ICE agents arrested more than 35,000 undocumented immigrants — more than double the number in 2006.

In Vermont, the Progressive Party candidate for state attorney general says she plans to prosecute President Bush for murder if she is elected. Charlotte Dennett made the announcement alongside the famed prosecutor Vincent Bugliosi, who recently wrote the book The Prosecution of George W. Bush for Murder. Bugliosi said any state attorney general or local district attorney can bring criminal charges against Bush once he leaves office early next year.