SUBPRIME DEBACLE SPURNS FED AND CONGRESSIONAL ACTION
Fed Chairman Ben S. Bernake appeared before Congress this week to discuss his thoughts on the dwindling US economy, which is still sliding from the subprime debt crisis. The chairman indicated support for a stimulus package, indicating that further Fed action (another rate cut seems inevitable) is not enough to put the economy back on its feet.
The New York Times quotes Bernake in saying that “In the financial markets, the subprime shock ‘has contributed to a considerable increase in investor uncertainty,’ he reported, adding that the Fed is seeing ‘considerable evidence that the banks have become more restrictive in their lending to firms and households.” The extent of the subprime mortgage damage goes beyond investor uncertainty as many investors unknowingly purchased risky securities and suffered as a result.
http://www.nytimes.com/2008/01/11/business/11fed.html
