The architects of the $700 billion financial rescue plan have urged American lawmakers to act swiftly or face severe economic consequences. Global stock markets have experienced declines for the second consecutive day due to growing fears that the rescue may be delayed.
After lawmakers reacted skeptically to the enormous scale of the proposed rescue and the lack of details surrounding it, American stock markets recorded a decline in stock values of about 1.5 percent due to uncertainty over when and how Washington will act. The rescue, which could be the largest in U.S. history, would cost each American $2,300.
The American FBI has launched an investigation into four faltering financial institutions on Wall Street. They are investigating whether there were possible frauds in mortgage giants, Fannie Mae and Freddie Mac, the failed bank Lehman Brothers, and the insurance company American International Group.
The legislation proposed by President George W. Bush’s administration would allow the government to purchase bad mortgage loans and other risky investments from banks and financial institutions, which would financially stabilize them and enable them to continue lending money. The intensification of stock market problems is just part of the economic devastation that Federal Reserve Chairman Ben Bernanke and Paulson warned senators would follow if Congress hesitated to accept the administration’s proposal to rescue troubled financial institutions. Without a rescue, Paulson and Bernanke outlined a grim scenario: neither companies nor consumers would be able to borrow money, and the world’s largest economy would practically come to a halt. (HRT)
