Trading on Wall Street surged Monday, as the Dow Jones shot up 413 points after Federal Reserve Chairman Ben Bernanke called for an additional federal economic stimulus package —a plan gaining acceptance by the White House.
U.S. stocks were higher in early afternoon trading, and prices for government debt and the dollar also rose. European markets also rose as banks there took advantage of government lifelines and credit markets began to thaw.
The Dow rose 413.21, or 4.67 percent, to 9,265.43. Broader indexes also rose sharply, as the Standard & Poor’s 500 index jumped 44.85, or 4.77 percent, to 985.40, and the Nasdaq composite index rose 58.74, or 3.43 percent, to 1,770.03.
Mr. Bernanke told the House Budget Committee Monday morning that with a protracted economic slowdown a likely possibility, another congressional economic stimulus package would be appropriate.
“With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate,” Mr. Bernanke said at a House Budget Committee hearing Monday morning.
Mr. Bernanke’s comments — the first time the central bank chairman had explicitly endorsed a second stimulus package —were applauded by Democratic leaders on Capitol Hill.
“Chairman Bernanke added his voice to the chorus of economists, experts and policymakers who insist that America needs a job-creating recovery package to get our economy back on track and to restore consumer and investor confidence,” said House Speaker Nancy Pelosi, California Democrat.
Added Senate Majority Leader Harry Reid, Nevada Democrat; “Given the serious economic problems we face, much more must be done to revive our economy and strengthen the middle class.”
Democrats have said they would consider including unemployment benefit extensions and other spending measures in a second stimulus package.
But House Republican Leader John A. Boehner cautioned against filling any additional stimulus package with “billions in new government spending masquerading as economic stimulus.”
White House Spokeswoman Dana Perino said the Bush administration was “open” to a stimulus plan, depending on its makeup, and would look to Mr. Bernanke and others for guidance.
Meanwhile on Monday,Treasury Secretary Henry M. Paulson briefed reporters on plans to dole out another $125 billion in taxpayer money to shore up the capital base of U.S. banks and thaw frozen credit markets.
The government last week made the first investment of $125 billion to purchase stakes in nine of the country’s biggest banks. The money was part of a $700 billion government rescue program for the financial system that Congress passed on Oct. 3.
Mr. Paulson said the department had already received expressions of interest from a broad cross-section of banks. Interested lenders will have until Nov. 14 to apply and Mr. Paulson said the $125 billion remaining in the program is sufficient to cover all the requests the department expects to receive. But not every bank that applies will get money, he added.View Entire Story
Sean Lengell covers Congress and national politics and can be reached at firstname.lastname@example.org.
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