The Bush administration says it’s preparing a new massive new intervention in the US financial system. Under the proposed move, the government would buy up distressed loans from troubled banks and other lenders. The plan is said to be similar to the federal buyout of leftover properties in the savings and loan scandal in the 1990s. The cost could end up dwarfing the multi-billion-dollar government bailouts of financial institutions Bear Stearns, Fannie Mae and Freddie Mac, and American International Group. Democrats also say they are pushing for greater relief for struggling homeowners facing foreclosure. On Thursday, congressional leaders gave bipartisan support to the effort after meeting with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. House Speaker Nancy Pelosi said Democrats have agreed to passing legislation by next week.

House Speaker Nancy Pelosi: “We just had what I believe was a very productive meeting, where we heard from the administration and from the chairman of the Fed, an initiative to help resolve the financial crisis in our country. We — our purpose is to do that and, in doing so, to insulate Main Street from Wall Street and recognize our responsibility to the taxpayer, to the consumer and to people all across our country.”

Earlier on Thursday, the Federal Reserve also announced it would inject some $180 billion in loans on the global financial market through foreign central banks.