Alarms Sounded in Push for Bailout

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WASHINGTON - The two top money men of the Bush administration return to Capitol Hill today, insisting Congress needs to pass their $700 billion rescue plan quickly to prevent even more serious financial problems.

Federal Reserve Chairman Ben Bernanke warned that if something isn't done "jobs will be lost. The unemployment rate will rise. More houses will be foreclosed upon."

But Congress is balking at using so much taxpayer money to soak up bad debt from institutions that made so many questionable investments.

"Why do we have one week to determine $700 billion that has to be appropriated or this country's financial system will go down the pipes?" Sen. Jon Tester challenged.

Sen. Jim Bunning said, "This massive bailout is not a solution, it is a financial socialism, and it's un-American."

But with the financial system so wobbly, analysts argue that something needs to be done.

Many warn that just the fact that the government has been trying to come to the rescue these last few days has helped hold things together.

"If the government did nothing, we would have seen major bank names - Morgan Stanley, Goldman Sachs - going under. We would have seen main street really get hit, big corporations no longer being able to get loans," New York Times assistant editor Andrew Ross Sorkin said.

But it's credit that keeps America rolling. And analysts warn that if nothing is done to rescue the financial system, banks will have a harder time loaning money - which would will lead to a deeper credit crunch. And that could cripple the economy.

Businesses can't grow without borrowing money. Consumers can't buy cars - can't buy houses.

So that's why Bernanke and Treasury Secretary Henry Paulson were so quick last week to cobble together a massive rescue plan - to assure lenders it's safe to lend again.

Without such a plan "we would have been in a deep, deep recession for a very, very long time. Is that ok, is that acceptable? That's the question," Sorkin said.

Now Congress is contemplating whether or not only this plan can stave off recession.

Meanwhile, those who helped plunge the country into this crisis may face criminal charges. The FBI is now investigating whether those who headed up four of the biggest collapsed financial institutions committed fraud.

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CBN News
Paul Strand

Paul Strand

CBN News Washington Sr. Correspondent

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