U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke on Tuesday urged Congress to act swiftly on a proposed financial system bailout and warned of dire consequences if they delay.
In prepared testimony that the two are scheduled to deliver this morning before the Senate Banking Committee, they warned financial markets are in serious stress and the best chance for stabilizing them is to remove illiquid assets.
"Action by Congress is urgently required to stabilize the situation and avert what could otherwise be very serious consequences for our financial markets and our economy," Bernanke said.
He and Paulson will answer lawmakers' questions about a proposed $700-billion bailout that would have Treasury buy bad assets from financial institutions and hold them until they could be sold at a later date.
Paulson said that with the broader economy now under threat, it was essential to move beyond the case-by-case approach followed in the takeover of Fannie Mae and Freddie Mac and the bailout of insurer AIG.