Bernanke vows to protect the economy
Published: Saturday, September 1, 2007 at 6:01 a.m.
Last Modified: Friday, August 31, 2007 at 11:14 p.m.
JACKSON, Wyo. - Federal Reserve Chairman Ben Bernanke vowed Friday to do all that is necessary to protect the national economy from the ill effects of a global credit crunch - but not to bail out investors and lenders "from the consequences of their financial decisions."
President Bush confidently predicted the country would safely weather the financial storm.
Friday's comments - made in separate appearances - by Bernanke here and the president in Washington, sought to send a reassuring but tough love message: Fed policymakers and the Bush administration are on top of the situation that has unnerved investors on Wall Street and around the world and raised anxiety on Main Street. But they'll act in the best interests of the economy.
While Bush announced steps Friday to help homeowners struggling to make their mortgage payments, he made clear he has no interest in bailing out lenders, some of whom got cocky, took on too much risk and ended up with bad loans.
"The government's got a role to play, but it is limited," Bush said at the White House. "A federal bailout of lenders would only encourage a recurrence of the problem."
In anxiously awaited remarks, Bernanke suggested the Fed's next move will be driven by economic considerations, not only in response to troubles of investors and lenders.
"Developments in financial markets can have broad economic effects felt by many outside the markets, and the Federal Reserve must take those effects into account when determining policy," he said.
Bush predicted the economy would get through the financial crisis and urged patience.
"The markets are in a period of transition as participants reassess and reprice risk," he said. "This process has been unfolding for some time, and it's going to take more time to fully play out. As it does, America's overall economy will remain strong enough to weather any turbulence."
Wall Street closed out the week with a big gain Friday.
The Dow Jones industrials was up 119 points. The Standard & Poor's 500 index rose 16.35, or 1.12 percent, and the Nasdaq composite index rose 31.06, or 1.21 percent.
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