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(CEP News) - The challenges facing the U.S. and global economy are "extraordinarily complex and historic in scope," but the critical measures announced Tuesday should contribute effectively to restoring normal market functioning, said Federal Reserve Chairman Ben Bernanke at the President's Working Group on Financial Markets.
Bernanke said the Fed was using all its powers to deal with this crisis and he finds the global response announced over the weekend from the Group of Seven Finance Ministers encouraging. Commenting on the Treasury's action to purchase equity in "a broad array" of financial institutions across the nation, he added that "the time had come for a more comprehensive and broad-based solution." The Treasury announced that $250 billion of the $700 billion financial rescue package would be used to purchase preferred stock. Half of that figure - $125 billion - will be used for nine major financial institutions who have already agreed to the deal, while the other half will be open to "a broad array of small and medium-sized banks and thrifts across the nation." Bernanke said the path toward vigorous growth won't be easy, but unless it is taken markets won't be restored and the economy won't return to its potential. "Americans can be confident that every resource is being brought to bear: historical understanding, technical expertise, economic analysis and political leadership," Bernanke said. The Fed Chairman said the most immediate responsibility of policy-makers is to restore confidence to credit markets, but longer-term reforms are also in scope. He said a detailed review of the regulatory structure will be essential, which should allow deficiencies to be overcome and allow the economy to better respond to challenges in the future. The Chairman's comments were published previously in Tuesday's Wall Street Journal. By Patrick McGee,
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