Fed Chairman Ben Bernanke suggested today, while testifying before the House Budget Committee, that Congress should consider passing some sort of economic stimulus package that would improve access to credit by homebuyers and other borrowers.
Here’s what Bernanke had to say:
As I discussed earlier, the extraordinary tightening in credit conditions has played a central role in the slowdown thus far and could be an important factor delaying the recovery. If the Congress proceeds with a fiscal package, it should consider including measures to help improve access to credit by consumers, homebuyers, businesses, and other borrowers. Such actions might be particularly effective at promoting economic growth and job creation.
The AP says that House Speaker Nancy Pelosi announced that Congress was considering an economic recovery bill as large as $150 billion, but that economists have said that the package would have to be twice that size.
The AP says:
Bernanke’s nod for another round of stimulus comes after a flurry of drastic actions by the Federal Reserve and the Bush administration has yet to unlock lending and calm financial markets.
Banks fear lending money to each other and to their customers, creating the worst financial crisis since the Great Depression. Businesses are reluctant to hire and boost capital investments. Consumers have hunkered down. All the economy’s problems are feeding off each other, creating a vicious cycle that Washington policymakers are finding difficult to break.