Wall Street bounced back today shooting the Dow Jones industrials up more than 400 points after a report that the federal government may create an entity that will take over banks’ bad debt, reports CNBC.

Treasury Secretary Henry Paulson is considering forming an entity like the one that was set up after the failure of savings and loan banks in the 1980s.

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In one of the most dramatic days in Wall Street’s history, Merrill Lynch agreed to sell itself to Bank of America for roughly $50 billion to avert a deepening financial crisis, while another prominent securities firm, Lehman Brothers, hurtled toward liquidation after it failed to find a buyer, reports the New York Times.

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