By Sophie Grove

 As stock markets fall and oil surges, the U.S. Congress appears ready to move quickly on a financial bailout package—possibly by Wednesday. To find out what they’re likely to do and what impact measures are likely to have on overseas banks operating in the United States, Newsweek’s Sophie Grove talked with Julia Coronado, Senior US Economist at the British bank Barclays Capital. Excerpts:

Newsweek: At the moment the question of foreign debt is still in limbo. What do you expect the US Treasury Secretary, Henry Paulson, to do over the next few days?

Coronado: I expect it to be a broad base. Keep in mind that many of the large foreign banks have US domicile operations. Many big banks foreign-based banks are also US broker dealers. But some of that distinction isn't that meaningful here. What will be key is the definition of the assets. I think most of the assets that they take will be generally domestically based in the sense that they are US mortgage related—both residential and commercial. They're not going to be taking mortgage securities from mortgages originated in Germany. The assets will all be US based. [With regard to] the participating institutions, that has yet to hammered out. I think it will definitely include a lot of the global banking groups, even if [Congress] says domestic financial institutions only. Right now the Treasury Secretary is seeking flexibility in terms of participation.

But what will happen in Congress?

There are a number of possible amendments—Congress has talked about ensuring that the Treasury pursues the kind of potential loan modifications to prevent foreclosures that were encouraged in the Housing and Economic Recovery Act of 2008. All of those provisions will also apply to the Treasury if they then inherit these assets. Secondly, they are talking about potential limitations on executive pay. I'm not sure exactly what form that will take. One thing that's been floated is that there will be limitations on executive pay in the event of misreporting of results. So that's still up in the air.

Will Congress rule out foreigners?

Again, no, I don't think that they will. Most of the big banks that hold these assets are global in their operations and so they will be allowed to participate even if Congress includes some provisions. That won't preclude most of the global banks from participating, they are global in their operations – and they do have US operations -- so they will be able to come to the table.

Is there a question of fairness here?

I think that they are trying to address the question of fairness in the sense that they want to keep the participation broad enough so that anyone that is holding a major amount of these US-based bad assets can come to the table. You don't want to send the message that you can invest in US [assets] and if it goes terribly wrong they're going to punish foreign investors. That would send a very bad signal in encouraging people to invest in US assets. The Treasury is very aware that having foreign confidence in our financial system is also very important. There are a lot of foreign intuitions that invested in US assets -- some of those went bad – and certainly they wouldn't want to exclude those institutions from participating in this fund.

Paulson said yesterday that he'd been "talking very aggressively with other countries around the world" about similar bailouts. Do you think foreign governments will follow his lead?

That's very possible. This crisis is certainly global in nature so it's quite possible that we would see some other parallel moves.

Is $700 billion enough to stop the credit crisis? This is really going to be hard work flogging ahead and getting to a more functional point in financial markets broadly.