Top Financial Officials Take Heat for Economy
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Newspaper companies are also up against a slowing economy, another reason advertisers are pulling back. Still, the nation's two top financial officers say they believe the U.S. will avoid a recession. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke spoke yesterday before the Senate Banking Committee, where they came under criticism for their handling of the economy.
NPR's John Ydstie reports.
JOHN YDSTIE: In his opening remarks, Bernanke told senators what they largely already know, that the housing downturn, subprime lending crisis, and the resulting pressures on financial markets have put strains on the economy.
Chairman BEN BERNANKE (Federal Reserve): In part as the result of the developments in financial markets, the outlook for the economy has worsened in recent months, and the downside risks to growth have increased.
YDSTIE: Nevertheless, Bernanke did not predict a recession, but rather a period of sluggish growth followed by a pickup in the economy later this year. Bernanke signaled that the Fed stands ready to push down interest rates again if necessary.
That made some senators suggest the Fed and the administration are in denial about how bad things really are. Senators from both parties also criticized the administration and the Fed for responding too slowly to growing economic problems.
Instead of sounding alarm bells, Democratic Senator Robert Menendez of New Jersey said the administration hit the snooze button. While acknowledging officials should not talk down the economy, he argued the administration was downplaying the dangers. That prompted this response from Treasury Secretary Paulson.
Secretary HENRY PAULSON (Treasury Secretary): If you were trying to talk the economy up, I'd hate to see you try to talk it down. But to...
Senator ROBERT MENENDEZ (Democrat, New Jersey): I'm just not trying to hide my head in the sand, either.
Secretary PAULSON: No, I'm not either.
YDSTIE: Earlier, Republican Senator Jim Bunning of Kentucky chided Chairman Bernanke for responding too slowly to the housing crisis.
John Ydstie, NPR News, Washington.