Stocks surge on report of entity for bad debt

NEW YORK (AP) - Wall Street has ended a volatile session sharply higher after a stunning late-session turnaround that sent the Dow Jones industrials up about 400 points. The big comeback followed a report that the federal government may create an entity that will take over banks' bad debt.

The report on CNBC said Treasury Secretary Henry Paulson is considering the creation of an entity like the Resolution Trust Corp. that was set up during the savings and loan crisis of the late 1980s and early 1990s.

Investors have been cheered by the notion of a huge federal intervention like the establishment of RTC to acquire the mortgage debt that has hobbled financial institutions and led to the intense volatility in the markets this week.

According to preliminary calculations, the Dow is up about 401 at the 11,010 level.

(Copyright 2008 by The Associated Press.  All Rights Reserved.)