US Officials Defend Bear Stearns Actions

By: Associated Press Email
By: Associated Press Email

Capitol Hill (AP) Federal Reserve Chairman Ben will face more questions about JPMorgan Chase's federally-backed buyout of struggling investment bank Bear Stearns today.

Bernanke will be joined in his second straight day of Capitol Hill testimony by the heads of both companies.

Yesterday, Bernanke told lawmakers the action was designed to preserve the viability of the U.S. financial system and doesn't represent a federal buyout. The Fed picked up $29 billion in Bear Stearns securities that could turn out to be losses for the government.

Senate Banking Committee Chairman Christopher Dodd says with that much money at risk, it's congress' responsibility to make sure the move was “necessary and judicious.”

Bernanke says he doesn't believe the central bank will lose money on the deal. He says it could even make money.

Bernanke also discussed the possibility of a recession for the first time yesterday.

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