Bernanke: Doing complete regulatory reform will go into difficult scheduling for congress. He urges action on step one today with a promise for step two.
Mr. Hinchey: Sees similarity now to depression, but understands bigger complexity. Concerned with more money in fewer hands. Aren't these things congress should be focusing on as well? Bush has been opposed to domestic spending for education, infrastructure and more.
Mr. Hill: Last seven days he had a message from administration that economy is strong. On Thursday learned there was a crisis. Over weekend learned that congress would be appropriating $700 Billion. He has received over 200 calls from his constituents saying don't do it. You are asking us to appropriate this much money to make better car loans and make credit more available. There's got to be a better answer.
Bernanke: Two front answer. Fiscal net cost less than $700Billion because it is acquiring assets. Second, credit will be squeezed farther which will affect income, jobs, credit, much more than just car loans. Choking credit takes away the lifeblood of the economy. Cannot say it will be like the depression. It is likely that stock portfolios will decrease and 401K's will devalue with no action.
Mr. DeMint: Concerned casualty will be belief in free enterprise system. Says you cannot solve a problem without understanding the root causes. Feels this problem was caused by government. Cheap money with wink and nod guarantee. Low risk, big rewards to mortgage companies and now they are embedded in all areas of our credit market. Free markets are being blamed for this. Do you believe this is a failure of the free enterprise system or an example of how government destroys the dynamics of free enterprise.
Bernanke: Inadequate risk management had something to do with it. Regulatory system needs reform. It is patchwork and needs restructured. There are historical and economic reasons for that. It may be less regulation, but smarter regulation.
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