US banks may need more bail-outs, says Ben Bernanke
Stock markets across the world suffered a second day of turbulence as the Chairman of the Federal Reserve warned that the US Government may have to pour even more cash into the twin bail-outs of its financial and economic systems.
By Edmund Conway and Angela Monaghan
Last Updated: 9:37PM GMT 03 Mar 2009
Ben Bernanke said the White House would have to consider increasing the scope of its $750bn banking rescue package, as well as readying further aggressive measures to shore up the world's biggest economy. His warning to Congress came as shares in London slid to a new six-year low amid disquiet about the stability of Britain's banks following Monday's cash calls from HSBC and AIG.
The Fed Chairman also remarked that although the government had little choice but to rescue AIG with a further $30bn cash injection, the episode had made him "more angry" than any other episode in the past 18 months.
Until the financial system had been repaired the economy would not recover, he said, adding: "Without a reasonable degree of financial stability, a sustainable recovery will not occur. Although progress has been made on the financial front since last fall, more needs to be done."
The comments indicate that the US Treasury, which has put its weight behind a asset insurance scheme for bad assets much like the UK's asset protection scheme, will have to spend more than originally anticipated on rescuing the banks. The Obama administration has slated for up to $750bn in new support to be spent on the banking bail-out in its first budget.
"We are better off moving aggressively today to solve our economic problems; the alternative could be a prolonged episode of stagnation," he said.
The comments saw the benchmark Dow Jones index of leading US stocks to drop 30 points, having dropped beneath the 7,000 mark on Monday for the first time in 12 years. It finished the day down 37.27 points, or 0.55pc, at 6726.02.
The FTSE 100 index closed down 113.74 points, or 3.14pc, at 3512.09.
A CBI study nevertheless showed that British companies were slightly more optimistic about their ability to obtain credit over the next three months in February. Their ability to place corporate paper also improved.
Stock markets across the world suffered a second day of turbulence as the Chairman of the Federal Reserve warned that the US Government may have to pour even more cash into the twin bail-outs of its financial and economic systems.
By Edmund Conway and Angela Monaghan
Last Updated: 9:37PM GMT 03 Mar 2009
Ben Bernanke said the White House would have to consider increasing the scope of its $750bn banking rescue package, as well as readying further aggressive measures to shore up the world's biggest economy. His warning to Congress came as shares in London slid to a new six-year low amid disquiet about the stability of Britain's banks following Monday's cash calls from HSBC and AIG.
The Fed Chairman also remarked that although the government had little choice but to rescue AIG with a further $30bn cash injection, the episode had made him "more angry" than any other episode in the past 18 months.
Until the financial system had been repaired the economy would not recover, he said, adding: "Without a reasonable degree of financial stability, a sustainable recovery will not occur. Although progress has been made on the financial front since last fall, more needs to be done."
The comments indicate that the US Treasury, which has put its weight behind a asset insurance scheme for bad assets much like the UK's asset protection scheme, will have to spend more than originally anticipated on rescuing the banks. The Obama administration has slated for up to $750bn in new support to be spent on the banking bail-out in its first budget.
"We are better off moving aggressively today to solve our economic problems; the alternative could be a prolonged episode of stagnation," he said.
The comments saw the benchmark Dow Jones index of leading US stocks to drop 30 points, having dropped beneath the 7,000 mark on Monday for the first time in 12 years. It finished the day down 37.27 points, or 0.55pc, at 6726.02.
The FTSE 100 index closed down 113.74 points, or 3.14pc, at 3512.09.
A CBI study nevertheless showed that British companies were slightly more optimistic about their ability to obtain credit over the next three months in February. Their ability to place corporate paper also improved.
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