Paulson, Bernanke Pitch Bailout to Congress

Updated from 11:51 a.m. EDT

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke came to Congress with a resounding message on Tuesday: Pay now, reform later.

But passing their $700 billion proposal to buy troubled assets from financial institutions faces several roadblocks. Lawmakers expressed serious concerns about writing a giant check so hastily, with few restrictions and no guarantees that taxpayer funds will be recouped.

Some legislators were also adamant about inserting provisions in any measure to tighten oversight, better protect homeowners, issue government stock warrants in exchange for relief and bar Wall Street executives from receiving "golden parachute" compensation packages as they exit struggling firms.

However, Bernanke and Paulson suggested such measures would delay passage of the legislation. The consequences of stalling could be dire, they said, inflicting further damage to an already fragile U.S. economy, as well as the global financial markets.

"I believe if the credit markets are not functioning that jobs will be lost, that our credit rate will rise, more houses will be foreclosed upon, GDP will contract, that the economy will just not be able to recover in a normal, healthy way," Bernanke said.

While Bush administration honchos testifying on the Hill -- Securities and Exchange Commission Chairman Christopher Cox and Jim Lockhardt, head of the Federal Housing Finance Agency, also appeared -- insisted that the proposal would benefit Americans, none guaranteed that it would lead to an economic recovery. They were also vague about purchasing methods and how they would arrive at prices for illiquid assets.