A magnifying glass on a finance sheet next to a globe represents international trade, money, and finance.
A magnifying glass on a finance sheet next to a globe represents international trade, money, and finance. - 
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Scott Jagow: The way things are moving right now, the financial system may have changed by the time I finish this sentence. Here's the latest development: Last night, the Federal Reserve voted to let Wall Street's last two major investment banks get into commercial banking. That means Goldman Sachs and Morgan Stanley can take deposits, giving them greater access to capital. I'm sure Bear Stearns and Lehman Brothers wish they had that. But that means that Goldman and Morgan will now be regulated by the Fed instead of the Securities and Exchange Commission.

Besides that, there haven't been many details about this huge government bailout announced on Friday. We know that's pegged at $700 billion, and the idea is to buy up bad mortgage debt. But one question that's come up is whether foreign banks will be included. We're joined by our European Correspondent Stephen Beard. Stephen, what are we hearing?

Stephen Beard: Well, yes, apparently there has been an agreement that this U.S. bailout will extend to toxic assets involving American mortgages which are held by foreign banks. However, there's still a considerable amount of doubt on this side of the Atlantic whether this is going to hold up to political scrutiny in the Congress. Are American taxpayers and their representatives going to be entirely happy seeing the U.S. taxpayers bailing out the likes of UBS, Deutsche Bank and so on, who are very heavily exposed to a lot of this debt.

Scott Jagow: And what about the governments of the countries where these banks are located? Are there any movements afoot for other governments to do their own bailing out?

Beard: Not as yet. Although, at the weekend, the U.S. Treasury was calling on foreign governments to join in and organize their own bailouts. The UK government, which is clearly the closest in economic policy to the U.S., has already ruled it out and said it is not going to go down the American rout. Clearly, it is concerned about its yawning budget deficit as a result of the recession in the UK.

Jagow: Another thing that seems to be a sticking point with this plan is how it's going to be paid for. Paulson is calling it a $700 billion plan -- that's the amount of toxic debt that needs to be bought up. And, it sounds like they're going to do this with Treasury bonds. What's the global appetite for $700 billion in Treasury bonds?

Beard: That is indeed another worry weighing on European markets this morning -- the concern about these bonds and are there going to be sufficient numbers of institutional investors. And, of course, underlying this concern is the much deeper anxiety about what happens next to the U.S. dollar. The events of the last week clearly are going to impose a lot of heavy burdens on the U.S. economy, and the turmoil has hardly reflected well on the U.S. economic model. So, if there is a dollar route, then all bets are off and we would be heading into very dangerous territory.

Jagow: Yeah, we'd be going backward, because the dollar had gained value for a while. And, of course, and that affects the price of oil; it's going up.

Beard: Indeed.

Jagow: All right. Steven Beard in London, thank you.

Beard: OK, Scott.