Yeah...you don't really fully grasp this issue.
First of all, we are asking the Treasury Secretary to buy up the illiquid assets currently harming the balance sheets (and liability statements), of our Investment Banking, and Commercial Banking sectors.
The Federal Reserve is the 'fund raiser' they will sell 700 Bil. in treasury bonds/ T-bills. This is effectively Debt. It will be purchased by foreign Central Banks because they don't have any other real option. The US produces the Debt which backs the fixed annuities used by Banks and Insurance Companies to generate 'guaranteed' returns.
Executive Power is almost a non-issue here (except wild assertions of FDR), the president already has the power to regulate (or not regulate) the Financial Markets.
The Causes:
MBS - Mortgage Backed Securities, groupings of +1000 mortgages, with their cash-flows artificially spread throughout a spread of Mortgage Security products produced by mortgage brokers.
(this created the illusion of secure investment, as very poor loans could be packaged with better loans to create a homogeneous cash-flow, that was the basis of the asset's valuation (didn't work so well). There are TRILLIONS in MBS floating; their value is not clear.
CDS - Credit Default Swap, These are essentially insurance on a loan (credit). Should a debtor not pay the loan back (default) then the Bank is out the amount of the loan. To hedge against that risk, banks bought Credit Default Swaps to "swap" the liability of default to the insurer(mostly AIG).
(I loan Bob $20 @ 25% interest, i will earn $5. Then i give Joe $2, in exchange, Joe has to cover the $20 if bob doesn't pay me back) [CDS is a more than 60 Trillion Dollar Market]
Leverage / Excess Liquidity - Alan Greenspan (NOT CLINTON), made money almost free (1% interest rates) for a long time. This made it easy for people Buy Cars, Houses, Boats. It also allowed them to lever Trades at 100:1. 200:1, even 400:1 in Forex.
This cheap money created a housing boom, which in turn made lending more attractive. Banks lowered their standards until everyone who could afford a mortgage had one. Then Came the Trouble. Unscrupulous brokers didn't care about the quality of the loans, they just wanted more Debt to package and sell as MBS. To meet the demand for fresh debt, some horrid Loans were born:
The NINA - No Income No Assets (no problem)
The NINJA - No Income No Job No Assets (no problem)
This Debt is TOXIC, and there is TRILLIONS of dollars of it. We don't know where it is (in what package of mortgages), or even exactly how much it will cost to undo.
Worse still, the Banks that purchased these questionable loan packages hedged their exposure to default by buying Credit Default Swaps, TRILLIONS of dollars worth. Again, we don't know which Swaps are worthless paper or how much of there is.
The ultimate concern is the total loss of demand of US Dollars, and US Debt.
Even this is a simplification. This crisis runs to the core of the post-Bretton Woods Monetary System.
Regulation etc is really not the issue for the near term, if we fail to act quickly enough to stem the loss of credit, WE ARE FUCKED!
Partisanship is also TOTALLY irrelevant.