Synopsis: The Senate Banking Committee held a hearing in response to a proposed authorization for the United States Treasury to spend up to $700 billion dollars to purchase distressed toxic assets, especially mortgage backed securities, and make capital injections into both domestic and foreign banks to prevent the collapse of the U.S. financial system... (read more)
Senate Banking: $700 Billion Bailout Proposal - Part 2
Opening statements by Treasury Secretary Henry Paulson, Federal Reserve Board Chairman Ben Bernanke, SEC Chairman Christopher Cox, and James Lockhart, Dir. Federal Housing Finance Agency. In their opening statements the overriding theme was we must act quickly to restore confident to the credit market.
Senator Dodd asks Bernanke “why do we have to act now”?
Bernanke: The financial markets are in a fragile condition and if we don’t act they will get worst, there will be no credit for the economy to function.
What would happen if we did not act?
Bernanke: If credit markets do not function jobs will be lost, unemployment rate will rise, more homes will go into foreclosure, GDP will contract, and the economy will not recover in a normal manner. We need to act to stabilize the situation as soon as possible.