Volatile week on Wall St. ends with federal rescue plan
Stocks ended a volatile week Friday in a rally on President Bush and Treasury Secretary Henry Paulson?s announcement of a federal rescue plan for the financial crisis hitting Wall Street over the past few weeks.
Bush said Friday that federal intervention in financial markets was not only warranted but "it is essential" to halt the worst financial crisis in decades. Details of the federal government?s plan will be hammered out over the weekend, but it is due to cost taxpayers hundreds of billions of dollars, according to Paulson. He says the underlying problem is troubled mortgage assets.
?We've taken a number of powerful tactical steps to increase confidence in the system, including the establishment of a temporary guarantee program for the U.S. money market mutual fund industry,? Paulson said Friday.
Still, members of Congress and ordinary taxpayers say they have questions about the plan.
?First of all, what is the taxpayer implication in all of this?? asked Connecticut Sen. Chris Dodd (D). ?Secondly, is this going to calm the markets over the long period??
?I think the government may be doing a little too much to let some of these guys off the hook,? says Dominic Maccia, of Syosset.
In recent weeks the government bailed out Bear Stearns, took over mortgage lenders Fannie Mae and Freddie Mac, lent AIG $85 billion to stay afloat and is trying to help Lehman Brothers find a buyer.
President Bush is urging Congress to quickly approve the bailout package.
As for the future, Dowling College economist Irwin Kellner says the recent turmoil will change the way banks do business. He says he thinks they?ve learned their lesson: no more risky loans.
Watch:Click for more reaction about the government?s bailout planClick here for Treasury Secretary Henry Paulson's comments on the planClick here for President Bush's reaction to the plan