NEW YORK (KCBS/AP) -- Federal Reserve Chairman Ben Bernanke gave Congress a grim assessment of the state of the economy Wednesday, saying that business growth hinges on stabilizing troubled financial markets.
Bernanke, in remarks prepared for the Joint Economic Committee of Congress, said the Fed will "act as needed" to minimize the disruptions to America's business life. His appearance came not long after President Bush said he remained confident that the administration and Congress will reach agreement soon on a "robust" plan to relieve the financial and credit crisis.
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Lawmakers have voiced skepticism about the the administration's $700 billion bailout plan, however, and both Bernanke and Treasury Secretary Henry Paulson heard skeptical statements from Senate Banking Committee members when they went to Capitol Hill Tuesday to plea for passage of the plan.
Both men were scheduled to brief lawmakers again Wednesday.
That skepticism from lawmakers may kill the sense of urgency to pass what would become the largest bailout in American history. East Bay Rep. Ellen Tauscher, the only member of Congress to have held a seat on the New York Stock Exchange, said many of her colleagues have asked whether $700 billion is the real amount needed to stabilize the credit market.
“How do we return value to the American people for this loan so that it's not just a risk but they actually can see some upside to it?” she said.
KCBS' Holly Quan reports
Financial markets showed some signs of stabilizing Wednesday as investor Warren Buffett's $5 billion bet on Goldman Sachs Group Inc. renewed confidence that U.S. financial firms will survive the credit crisis.
Stock futures pointed to a higher opening, although the credit markets, waiting for further news on the government's bank rescue package, were still restrained.
Buffett's Berkshire Hathaway Inc. said Tuesday it was investing at least $5 billion in Goldman, a move Wall Street took as strong sign of support for the independent investment bank model.
Besides buying $5 billion in preferred stock, Berkshire also got warrants to buy another $5 billion in Goldman's common stock. Goldman also said late Tuesday it would raise another $2.5 billion in its own public stock offering; the company and Morgan Stanley earlier this week were granted approval to become bank holding companies, which would help them strengthen their balance sheets.
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