Saturday, September 20, 2008
Paulson and Bernanke told the president that the situation was “extraordinarily serious,” according to a senior administration official.
"If we don't do this, we risk an uncertain fate," Mr. Bernanke added. He said that if the problem wasn't corrected, the U.S. economy could enter a deep, multi-year recession akin to Japan's lost decade of the 1990s, or what Sweden endured in the early 1990s when a surge in bad loans plagued the economy and sent unemployment to 12%. One lawmaker asked whether the solution will prevent bank failures. Mr. Paulson said it will stabilize markets. "But we'll still see banks fail in the normal course," he said.