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“Right now the price of admission is zero,” he said.

Mr. Bernanke conceded that the government will be hard-pressed to accurately price the value of the mortgage-based securities it will be taking off the hands of private lenders. Because there is effectively no market in the securities, Mr. Paulson and Mr. Bernanke said it was impossible to estimate how much of the $700 billion would be needed to purchase the assets, or what the ultimate tab for taxpayers will be.

Mr. Bernanke, who said his e-mail box was overflowing with messages from auction specialists and asset workout experts hoping to help administer the federal program, at one point compared the pricing of the securities the Treasury to the inexact science of pricing art masterpieces.

“It’s like an auction at Sotheby’s,” he said. “Nobody knows what the art is worth until it is sold, and then everybody knows.”

He said the government’s plan was prevent the dumping of the securities at “fire-sale prices” that would only ravage further the balance sheets of banks, businesses and homeowners. The government could hold onto the bad securities until the market settled down and the housing and credit markets recovered.

While defending the administration’s proposal, Mr. Paulson, a former Wall Street titan himself as chief executive officer of Goldman Sachs, repeatedly expressed his personal distaste at having to defend a massive government intervention in the markets. He called the lending abuses and regulatory failures “an embarrassment to the United States of America.”

“I’m frustrated,” he said. “The taxpayer is already on the hook and is going to suffer the consequences if things don’t work the way they should. And so the best protection for the taxpayer is to have this work.”