Hearing of the House Financial Services Committee - Systemic Risk and the Financial Markets

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REP. EMANUEL CLEAVER: Mr. Chairman.

REP. FRANK: And we will get, as the gentleman requested, responses in writing.

The gentleman from Missouri.

REP. CLEAVER: Mr. Chairman, there are those who suggest that had Congress not approved the stimulus package when it did that the current crisis would probably be worse. There is no way to tell for sure whether they are accurate or not. But I'm curious about your position on the talk now about a stimulus package number two, and which might include an extension of employment insurance and perhaps even it would deal with some of the issues that we failed to deal with in the first stimulus package like infrastructure construction, where the federal government confirms an infrastructure project, and local communities are able to go out and hire.

And I'm wondering -- and in addition to that, the fourth -- those who are predicting that the fourth quarter will look very, very bleak, and that the positive benefits from Stimulus I are fading. So they would suggest that there's a need for Stimulus II.

Do you agree with those who are encouraging stimulus two?

MR. BERNANKE: As a preliminary matter of fact, I think BY extension was in fact -- was that passed or is that --

REP. CLEAVER: Yes.

MR. BERNANKE: That part has been--

REP. FRANK: That was signed, not cheerfully but it was signed.

MR. BERNANKE: -- that's been done. I think it's a little bit -- just a bit early, the stimulus package one as you call it is only now really beginning to feed into consumer incomes. Our sense is that it is being helpful. We've seen the consumer spending hold up despite a lot of other concerns.

But I guess my inclination would be to wait and see a bit longer to see if, A, if the economy begins to strengthen on its own, and B, to assess the effects of the stimulus that's already been put into the system.

REP. CLEAVER: Well, as we talk about systemic action, do we wait until we get into the fourth quarter and realize --

REP. FRANK: Could I say to the gentleman, we are going to have the chairman back next week on Humphrey-Hawkins when this will be very much the center of discussion.

REP. CLEAVER: That's more appropriate than right now. Thank you, Mr. Chairman.

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