Officials try a little confidence boosting
Fed Chairman Ben Bernanke, Senate Banking Committee Chairman Christopher Dodd, and Treasury Secretary Henry Paulson came together today to reassure everyone that they're on top of any changes to the subprime-riddled economy. Bob Moon reports.
Federal Reserve Chairman Ben Bernanke, U.S. Senate Banking Committee Chairman and Democratic presidential candidate Christopher Dodd of Connecticut, and Treasury Secretary Henry Paulson meet to discuss the volatile financial markets in Dodd's Captiol Hill office today. (Chip Somodevilla, Getty Images)
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TEXT OF STORY
Kai Ryssdal: And you know, there's nothing touchy-feely about Wall Street. Either you win on a trade or you lose.Money in your pocket or in somebody else's. And now that we're a couple of trading days past the Federal Reserve's cut in the discount rate, investors are starting to wonder what's next for them.
So far, nothing quantitative. Nothing they can trade on. But Marketplace's Bob Moon reports there were some subtle signs the ground under Wall Street might be becoming a little more stable.
Bob Moon: The message didn't really change today, but it might finally be getting through.
Treasury Secretary Henry Paulson reiterated, "This is going to take a while to play out." Federal Reserve chairman Ben Bernanke is still promising to be vigilant. What has changed is the visibility of the men offering those reassurances — in particular, Mr. Bernanke.
Today, the Fed chief and the Treasury secretary went to Capitol Hill. They met with Senate Banking Committee Chairman Christopher Dodd. He told reporters — and perhaps more importantly, the banking industry and investors — that he was cheered by a promise from Bernanke:
Christopher Dodd: I asked the chairman of the Fed whether or not he was willing to use all the tools available to him. He said he was prepared to do that — absolutely is the language he used — and I applaud that.
At the same time, the Treasury Secretary declared he has "great confidence" in the Fed. Words like that might be worth as much or more than the $119 billion the Fed has pumped into the banking system so far this month.
Kenneth Thomas lectures in finance at the Wharton School of Business. He says the rookie Fed chairman seems to be emerging from a credit crunch of a different kind: a lack of trust he's faced from investors.
Kenneth Thomas: They realize that Bernanke realizes that it really is a serious situation. As he gets more experienced in this role, he'll realize that confidence, perception, those are the things that matter the most in financial markets.
If it's true the fundamental underpinnings of the economy are sound, Thomas suggests Wall Street might just need more confidence in the messenger.
I'm Bob Moon for Marketplace.
