Bernanke and Paulson urging fast action on financial bailout

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Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson urged Congress on Tuesday to quickly pass a $700 billion financial bailout, warning that letting problems persist would have dire consequences for the national economy.

The nation's top two economic leaders made the assertions in prepared remarks to be given later Tuesday to the Senate Banking Committee. Their latest take on the financial crisis came as the Bush administration and lawmakers scramble to forge an agreement on a plan that could be the biggest such bailout in U.S. history.

"If financial conditions fail to improve for a protracted period, the implications for the broader economy could be quite adverse," Bernanke said in his prepared for the panel.

Paulson's written testimony struck a similarly grave note.

"We must do so in order to avoid a continuing series of financial institution failures and frozen credit markets that threaten the well-being of American families' financial well-being, the viability of businesses both small and large and the very health of our economy," Paulson said.

Their appearances came as President Bush, in New York for meetings at the United Nations, sought to assure world leaders that the U.S. government has the problem under control.

He said he is confident that Congress will pass the necessary legislation to deal with the problem and said he has assured other leaders that the financial package is "a robust plan to deal with serious problems." He said there are ideas about how to change it, but that there is a desire to get a package done quickly.

The plan would enable the government to buy bad mortgages and other troubled assets held by endangered banks and financial institutions. Getting those debts off their books should bolster their balance sheets, making them more inclined to lend and easing one of the biggest choke points in the credit crisis. If the plan works, it should help lift a major weight off the sputtering economy.

The U.S. has taken extraordinary measures in recent weeks to prevent a financial calamity, which would have devastating implications for the broader economy. It has, among other things, taken control of mortgage giants Fannie Mae and Freddie Mac, provided an $85 billion emergency loan to insurance colossus American International Group Inc. and temporarily banned short selling of hundreds of financial stocks.

Bernanke and Paulson defended their unprecedented steps -- many just in the past few weeks -- to stem the crisis. Even so, Bernanke said that "global financial markets remain under extraordinary stress."

Paulson said the piecemeal case the government has taken so far was necessary but insufficient in promoting the massive plan.

"We must now take further, decisive action to fundamentally and comprehensively address the root cause of this turmoil," the Treasury chief said. The root cause goes back to the rotten debts held by financial institutions, which are choking off the flow of lending, a crucial ingredient to the economy's health.

Wall Street has been dramatically reshaped amid all the fallout. The Fed agreed to let Goldman Sachs and Morgan Stanley -- the country's last two investment banks -- become bank holding companies so that they can take deposits, like a commercial bank, in a bid to survive. Merrill Lynch agreed to be bought by Bank of America. Lehman Brothers sought bankruptcy protection, and Bear Stearns was taken over by JPMorgan Chase.

Congressional leaders and the Bush administration are haggling over details of the rescue plan, including Democrats' demand that executives at failing financial firms that receive the government help can't get "golden parachutes" on their way out the door.

Paulson, however, said the bill should be enacted "cleanly" and said lawmakers should "avoid slowing it down with other provisions that are unrelated and don't have broad support."

Paulson and Bernanke, the architects of the bailout, were expected to face tough questions from lawmakers in both parties about the eye-popping cost, how the rescue would work and how taxpayers would be affected.

Paulson was in talks with Democrats about their proposal that the government be able to purchase equity in faltering companies as part of the plan, so taxpayers could benefit from future profits.

The administration is balking at another key Democratic demand: allowing judges to rewrite bankrupt homeowners' mortgages so they could avoid foreclosure.

Congressional aides said the House could act on a bill Wednesday or Thursday, with the Senate following soon thereafter.

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Stocks open higher ahead of hearing on bailout

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原帖由 無法笑 於 2008-9-23 09:36 PM 發表
Stocks open higher ahead of hearing on bailout

Wall Street opens higher ahead of congressional hearing on $700B government bailout plan.

Stocks are moderaTELy higher in early trading as investors await testimony from top federal economic officials before Congress about efforts to hammer out a $700 billion financial rescue plan.
Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and Securities and Exchange Commission Chairman Christopher Cox are scheduled to testify Tuesday and Wednesday before lawmakers, who are working with the Bush administration to complete the details of the proposed bailout. Bernanke warned in prepared remarks that "the implications for the broader economy could be quite adverse" if current economic turmoil persists. The Dow Jones industrials are up 34 at the 11,050 level.

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原帖由 無法笑 於 2008-9-23 09:38 PM 發表



Wall Street opens higher ahead of congressional hearing on $700B government bailout plan.

Stocks are moderaTELy higher in early trading as investors await testimony from top federal eco ...

Bernanke warned in prepared remarks that "the implications for the broader economy could be quite adverse" if current economic turmoil persists.