Bernanke: Yes to Second Stimulus Package

In testimony before the House Budget committee currently underway (C-Span) Fed Chairman Ben Bernanke backed the second economic stimulus package backed in the House.

"Given that the economy is likely to be weak for several quarters," Bernanke said, "the consideration of a fiscal package seems appropriate."

Bernanke said the government intervention into the economy and financial system may be starting to make an impact.

"There are encouraging signs, but it's still too early to asses" the full effects of the various bailout/rescue plans, Bernanke said.

Bernanke called the two elements of the $700 billion Wall Street rescue/bailout plan -- the buying of troubled assets and the government investment into banks -- "highly complementary," despite the fact that, only a couple of weeks ago, Treasury said such a buy-in was unnecessary.

That must be the sort of flexibility and nimbleness Treasury Secretary Hank Paulson has been talking about.

The housing market remains depressed, the Fed chief said. "Residential construction is likely to contract into next year," Bernanke said.

So far, the Dow is up 1.6 percent, or 144 points --about where it was before Bernanke started speaking. The Standard & Poor's 500 index is also up, 1.9 percent and the Nasdaq is up less than one percent.

-- Frank Ahrens