Bernanke & Paulson vs. Congress: Aren't they on the Same Side?

How can these guys not get it together?  What a message we send to all the foreign nations with countless millions invested in our corporations and banks, yet alone to the American Taxpayer. 

Give us all a break and agree to act soon, before our bank accounts, 401K's and IRA's go to zero.

We are all on the same side.  We are due for a Bull rally. 

Que the NYTimes:

WASHINGTON — The Federal Reserve chairman, Ben S. Bernanke, urged Congress on Wednesday to take quick action on a proposed $700 billion economic-recovery plan, and warned that delays threaten not only financial stability in the United States but, by implication at least, prosperity overseas.

The chairman of the committee, Senator Charles E. Schumer, said that all but “a few outliers” among lawmakers agreed that some version of the plan to rescue the American financial system must be approved, and soon. But he said it would not be passed without adequate safeguards.

“We will not be dilatory, we will not add extra amendments, we will not Christmas-tree this bill,” Mr. Schumer, Democrat of New York, said using slang for the lawmakers’ occasional propensity to tack special-interest items onto legislation.

Mr. Bernanke said that international trade “provided considerable support for the U.S. economy over the first half of the year,” but that this stimulus could not be counted on in the long run.

“Economic activity has been buoyed by strong foreign demand for a wide range of United States exports, including agricultural products, capital goods and industrial supplies, even as imports declined,” he said.

“However,” Mr. Bernanke went on, “in recent months, the outlook for foreign economic activity has deteriorated amid unsettled conditions in financial markets, troubling housing sectors and softening sentiment. As a consequence, in coming quarters, the contribution of net exports to United States production is not likely to be as sizable as it was in the first half of the year.”

Mr. Bernanke’s remarks added to the continuing sense of urgency, as he alluded to extraordinarily levels of uncertainty and risk, well beyond the sagging housing market whose troubles are at the core of the problems.

“Given the extraordinary circumstances, greater-than-normal uncertainty surrounds any forecast of the pace of activity,” Mr. Bernanke said. Overall growth will probably continue “below its potential rate,” he said, and “the inflation outlook remains highly uncertain.”

The session offered a blend of concerns over financial markets, both on Wall Street and abroad, and intensely political worries for the lawmakers as Election Day draws near.

Mr. Schumer said he and other lawmakers were listening to their constituents, who were reacting with “amazement, astonishment and intense anger” to the original outlines of the $700 billion plan, as laid out by the Bush administration, and to the high-risk behavior that spawned the crisis.

“We were told that markets knew best, and that we were entering a new world of global growth and prosperity,” Mr. Schumer said as the committee greeted Mr. Bernanke, who is testifying on Capitol Hill for a second consecutive day. “We now have to pay for the greed and recklessness of those who should have known better.”

It is time, Mr. Schumer said, for the American economy to be revived as the “engine of prosperity,” rather than as a “casino” for high-rollers in the realm of finance.

“With the exception of a few outliers on either side, there is clear recognition among members of both parties that we must act and act soon,” Mr. Schumer said. But without adequate safeguards, he said, “then we risk the plan failing.”

The White House said President Bush may make a prime-time television appearance to bolster support for the program, whose basic premise calls for the Treasury Department to oversee the purchase of distressed mortgage-backed securities, and hopefully resell them to recoup at least some of the taxpayers’ money used to buy them.

Mr. Bush’s chief spokeswoman, Dana Perino, said on Wednesday that the country could face “a financial calamity” if Congress does not act soon.

Mr. Bernanke, who reminded lawmakers on Tuesday that his background is in academe, not Wall Street, told Mr. Schumer’s panel that the Federal Reserve believes in general that “private-sector arrangements” are best in straightening out problems in the financial markets.

“Government assistance should be given with the greatest of reluctance and only when the stability of the financial system and, consequently, the health of the broader economy is at risk,” Mr. Bernanke said. And now is such a time, he said.

Meanwhile, doubts were raised about the ultimate cost of the bailout, assuming it is approved in some form. Until more details emerge about what the government will buy, and how, the director of the Congressional Budget Office said it “cannot provide a meaningful estimate of the ultimate cost” to taxpayers.

Over time, Peter R. Orszag of the nonpartisan budget office told the House Budget Committee, the cost could be less than the $700 billion “sticker price.”

The challenge, he said, was for the Treasury to avoid taking the riskiest assets off Wall Street’s hands unless it can get them at fire-sale prices.

SOURCE: http://www.nytimes.com/2008/09/25/business/economy/25cong.html?hp