Washington: It was a dramatic day for lawmakers on Capitol Hill, as they debated the massive Wall Street bailout plan.
The US Treasury Secretary and Federal Reserve Chairman desperately tried to convince the US Congress to quickly approve the plan, or risk economic disaster.
It was the first public grilling since proposing what may be the largest government bailout ever.
Treasury Secretary, Henry Paulson said, “I share the outrage. It’s embarrassing for the United States of America.”
Paulson is a Wall Street veteran and he, along with the academic turned Federal Reserve Chairman Ben Bernanke urged the Congress to act quickly on the US $ 700 billion rescue plan.
In explaining why, the Fed chairman summed it up by saying, “I do believe we need to act to stabilise the situation which is continuing to be very unpredictable and very worrisome.”
Former Vice Chairman of the Federal Reserve, Alan Binder added his bit by saying, “I think if you translate that from Fed speak to English, you're hearing deep concerns. I mean Federal Reserve chairs are supposed to be islands of tranquility, exude confidence!”
Both men stressed the need to keep credit markets functioning, to keep banks working and the businesses flowing. If that does not happen, they warned of dire consequences.
The Fed Reserve chairman said, “Jobs will be lost, the unemployment rate will rise, more houses will be foreclosed upon, GDP will contract!”
Banks need to keep lending to keep businesses running and to keep people in their homes. One economist illustrated a worst-case scenario for consumers, just in case the credit markets deteriorated further.
With the sense of urgency, came the questions over the anger that taxpayers are getting socked with footing the bailout.
“It may make you angry, it makes me angry. When you ask about the taxpayers being on the hook, guess what! They're already on the hook!” said Paulson while trying press for the Congress to rally around Wall Street.
Just how much does the taxpayer have to be on the hook for, we tried to probe.
An economist from the Peterson institute, Michael Mussa said, “It's impossible to say or give a precise figure. But if we had a severe recession, we are talking about losses in the economy in the hundreds of billions if not trillions of dollars.”
Clearly, it a present and huge danger and markets are fraught with fear.