Pressure grows on US to take bold steps on economy
By JEANNINE AVERSA
Associated Press
October 7, 2008
Page 2 of 2
The Fed made an opaque reference on Monday that it was exploring "ways to provide additional support" to "unsecured funding markets."
The creation of a separate legal entity was being examined as one way for the Fed to get into the commercial paper market, the person with familiar with the plan said.
The Fed pledged Monday to take "additional measures as necessary" to battle the worst credit crisis in decades. Wall Street took a nosedive, with the Dow Jones industrials plunging more than 800 points at one point during the day before finishing down 370. Fears spread around the globe about the ability of policymakers in the United States and abroad to turn around the situation.
Treasury Secretary Henry Paulson has tapped a former Goldman Sachs executive to be director of the government's bailout program. Neel Kashkari, who has worked with Paulson at the department since July 2006, was chosen Monday as the interim head of the government's unprecedented effort to unclog the credit markets.
Kashkari, who was a vice president in Goldman's San Francisco office before joining the department, is one of four former executives from the firm now working feverishly to resolve the financial crisis.
The lending lockup is a key reason why the U.S. economy is faltering. Unable to borrow money freely or forced to pay a high cost to borrow, employers are cutting jobs and reducing capital investments. Consumers have retrenched.
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