Fed Steps In To Help More Banks

September 22, 2008 9:01:15 AM PDT
The Federal Reserve has stepped in again to help Wall Street. The Fed's board has voted to allow investment banks, Goldman Sachs and Morgan Stanley to become bank holding companies.

There were concerns about their ability to survive following last week's collapse of Lehman Brothers. Goldman and Morgan Stanley will be able to set up banking subsidiaries to take deposits and also get access to the Fed's emergency loan program.

The president heads to New York Monday for the annual U.N. General Assembly session, but aides say he'll be getting regular updates on the financial rescue between meetings with world leaders.

Treasury Secretary Henry Paulson is pushing congress to pass the largest bail-out in American history; $700-billion dollars.

The fear is that America's lending system could seize up, with banks hoarding their money and consumers unable to get a loan. The plan includes the government buying mortgage related debt from banks, with the goal of getting them lending again.

"We need to get this right. We need to do it quickly," said Senator Christopher Dodd (D) Connecticut.

"If we don't act and we don't act quickly, we're going to jeopardize our economy," said John Boehner (R) Ohio.

Still, many are concerned that, with such a bail-out, taxpayers are being forced to fund corporate welfare.


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