The US government over the weekend outlined its plan to provide a financial rescue, of sorts, for the many distressed financial institutions whose profits, capital and liquidity have atrophied over the course of the credit crunch.Following institutional-specific, US government rescues for Bear Stearns (six months ago), for Fannie Mae and Freddie Mac (two weeks ago) and American International Group (last week) the US government is now on the verge of committing its own balance sheet, and taxing powers, to extend financial aid that all US financial institutions may seek to use.The budget for the financial rescue appears to be open-ended.While the draft bill published on Saturday sets a limit on purchases of mortgage-related assets of US$700 billion, this limit is on assets "outstanding at any one time".Nor does the bill envisage any further, explicit appropriation by the US Congress. Any funds spent by the US Treasury under the authority of the bill will be deemed to have been appropriated.So if the US Treasury buys toxic assets and resells them it will be free to buy more, so long as the portfolio does not exceed US$700 billion.The Treasury will be free to buy "mortgage-related assets" that the bill defines as residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages. This last phrase opens the door to heavily structured instruments.The planned mechanism for the purchase of assets is a reverse Dutch auction. This is not the only possible mechanism, but is the only one (and presented only as an example) in the limited briefing material published over the weekend by the Treasury.Treasury will hire asset managers to assist in the process and to manage the portfolio.Financial institutions may sell assets originated as of last week.US-headquartered financial institutions are the main target of the bill, but included are those with "significant operations" in the US, and it seems clear that, at this stage, the US government proposes to include select foreign institutions in the net.