23 September 2008

Bernanke, Paulson call for urgent implementation of bailout plan

Financial markets remain under extraordinary stress, and action by the Congress is urgently required, Bernanke said. Secretary Paulson called to avoid slowing the plan down with other provisions that are unrelated or don't have broad support.

Financial regulators acted much too late and far too timidly, Chris Dodd, chairman of the Senate Banking Committee criticized in his opening remarks to the hearing before the Senate Banking Committee. “They failed to enforce the laws that Congress passed requiring them to prohibit these bad lending practices”, he went on noting that the crisis was created by a ‘combustible combination of private greed and public regulatory neglect’.

 

Dodd harshly criticised the bailout plan proposed by Treasury Secretary Paulson. “It would do nothing to help even a single family save a home. It would do nothing to stop even a single CEO from dumping billions of dollars of toxic assets on the backs of taxpayers – and walking away with a bonus and a golden parachute. And it would allow him to act with utter and absolute impunity – without review by any agency or court of law”, he said.

 

“After reading this proposal, I can only conclude that it is not just our economy that is at risk, Mr. Secretary, but our Constitution, as well”, he added.

 

Treasury Secretary Paulson called upon the Senate Banking Committee to “enact this bill quickly and cleanly, and avoid slowing it down with other provisions that are unrelated or don't have broad support.”

 

And Federal Reserve Chairman Ben Bernanke underlined that “action by the Congress is urgently required to stabilize the situation”. Financial markets remain under extraordinary stress, he underlined. “It is essential to deal with the crisis at hand.”

 

With a view to the alternative plan proposed by the chairman of the Senate Banking Committee, Chris Dodd, Paulson said that the programme also must “include provisions that ensure transparency and oversight while also ensuring the program can be implemented quickly and run effectively.”

 

Looking to future regulation Bernanke said that the “shortcomings and weaknesses of our financial markets and regulatory system must be addressed. However, the development of a comprehensive proposal for reform would require careful and extensive analysis that would be difficult to compress into a short legislative timeframe now available.”

 

And Secretary Paulson pointed out that “our next task must be to address the problems in our financial system through a reform program that fixes our outdated financial regulatory structure, and provides strong measures to address other flaws and excesses.”

 

Dodd opening statement

Speech Paulson

Speech Bernanke

Further information about the hearing

 

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