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Bail-out fears return to markets | Bail-out fears return to markets |
(1 day later) | |
Concern returned to the US stock market as US Treasury Secretary Henry Paulson faced tough questions about his $700bn (£382bn) financial rescue plan. | Concern returned to the US stock market as US Treasury Secretary Henry Paulson faced tough questions about his $700bn (£382bn) financial rescue plan. |
The Dow Jones industrial average closed almost 1.5% lower after Mr Paulson was grilled by a Congressional hearing. | The Dow Jones industrial average closed almost 1.5% lower after Mr Paulson was grilled by a Congressional hearing. |
The plan faced opposition from both Republican and Democrat senators on the Senate Banking Committee. | The plan faced opposition from both Republican and Democrat senators on the Senate Banking Committee. |
Investors are concerned that the measures could now either be delayed or watered down. | Investors are concerned that the measures could now either be delayed or watered down. |
"We have got to look at some alternatives," said senior Republican senator Richard Shelby. | "We have got to look at some alternatives," said senior Republican senator Richard Shelby. |
The committee's chairman Democrat senator Chris Dodd, speaking after the hearing, said: "What they have sent us is not acceptable." | The committee's chairman Democrat senator Chris Dodd, speaking after the hearing, said: "What they have sent us is not acceptable." |
Another senator asked if a smaller programme worth $150 billion might be enough to begin the bail-out, with a promise of more to come. | Another senator asked if a smaller programme worth $150 billion might be enough to begin the bail-out, with a promise of more to come. |
Mr Paulson replied that this would be a "grave mistake" and would fail to end the financial turmoil in the markets. | Mr Paulson replied that this would be a "grave mistake" and would fail to end the financial turmoil in the markets. |
'Private greed' | 'Private greed' |
Senators voiced concerns that taxpayers would be paying the price of mistakes made by banks. | Senators voiced concerns that taxpayers would be paying the price of mistakes made by banks. |
I believe if the credit markets are not functioning that jobs will be lost...that the economy will just not be able to recover in a normal, healthy way Ben Bernanke, US Federal Reserve chairman Global reaction to financial turmoil | I believe if the credit markets are not functioning that jobs will be lost...that the economy will just not be able to recover in a normal, healthy way Ben Bernanke, US Federal Reserve chairman Global reaction to financial turmoil |
They also said it was crucial not to rush through the bail-out, without carefully considering how it would work. | They also said it was crucial not to rush through the bail-out, without carefully considering how it would work. |
Richard Shelby said: "I have long opposed government bail-outs for individuals and corporate America alike." | Richard Shelby said: "I have long opposed government bail-outs for individuals and corporate America alike." |
And Chris Dodd said the "economic maelstrom" stemmed from a mixture of "private greed and public regulatory neglect". | And Chris Dodd said the "economic maelstrom" stemmed from a mixture of "private greed and public regulatory neglect". |
However US Federal Reserve Chairman Ben Bernanke urged swift action. | However US Federal Reserve Chairman Ben Bernanke urged swift action. |
He warned that without the plan, the "fragile" financial markets would almost certainly get worse and this would have an effect on the rest of the economy. | He warned that without the plan, the "fragile" financial markets would almost certainly get worse and this would have an effect on the rest of the economy. |
"I believe if the credit markets are not functioning that jobs will be lost, that our credit rate will rise, more houses will be foreclosed upon, GDP will contract, that the economy will just not be able to recover in a normal, healthy way," said Mr Bernanke. | "I believe if the credit markets are not functioning that jobs will be lost, that our credit rate will rise, more houses will be foreclosed upon, GDP will contract, that the economy will just not be able to recover in a normal, healthy way," said Mr Bernanke. |
European markets were also hit by concerns about the bail-out plan. | European markets were also hit by concerns about the bail-out plan. |
The UK's FTSE 100 closed down 1.6%, France's Cac 40 fell 1.7%, while in Germany the Dax ended 0.5% lower. | The UK's FTSE 100 closed down 1.6%, France's Cac 40 fell 1.7%, while in Germany the Dax ended 0.5% lower. |
Earlier in Asia, Hong Kong's Hang Seng index ended nearly 4% lower. Japan's market was closed for a public holiday. | Earlier in Asia, Hong Kong's Hang Seng index ended nearly 4% lower. Japan's market was closed for a public holiday. |