Act swiftly on bailout, warn Bernanke, Paulson

Appearing together before Senate Banking Committee this morning, Federal Reserve Board Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson Jr. urged Congress to react rapidly to current financial crisis by passing legislation allowing the government to buy $700 billion in illiquid assets from financial institutions. Financial markets remain under “extraordinary stress,” Mr. Bernanke said, and lawmakers must take steps stabilize a financial situation that could pose “very serious consequences” for the U.S. “financial markets and for our economy.” He said that the Treasury's proposal will reduce investor uncertainty about the “current value and prospects of financial institutions.” The U.S. economy continues to confront “substantial challenges,” including a weakening labor market, elevated inflation and stresses in the financial markets. “If financial conditions fail to improve for a protracted period, the implications for the broader economy could be quite adverse,” he said. Mr. Paulson urged that Congress come to a bipartisan consensus “to enact this bill quickly and cleanly, and avoid slowing it down with other provisions that are unrelated or don't have broad support.” He called the asset purchase program the “single most effective thing” that can be done to help homeowners and stimulate the economy.