Stock markets around the globe reacted negatively Monday to the financial bailout plan Congress passed late last week. The Dow Jones fell 800 points to close below 10,000 for the first time in four years. Iowa Senator Chuck Grassley says it’s very unfortunate the markets at home and abroad aren’t responding favorably to the 700-billion dollar rescue plan for Wall Street.
Grassley says: "It’s very clear that this credit crunch is not just a U.S. problem. What happens in the U.S., when we sneeze here, the world gets a fever and gets the flu. It’s a very worldwide situation." The expensive rescue plan was meant to reassure the panicked markets but it appears it had the opposite effect. Grassley says he’s heard talk of a larger, more far-reaching effort that’s in the works.
"It’s my understanding that overnight, the Big Eight financial people got together," Grassley says. "I haven’t heard it announced yet, but this morning they’re going to have kind of a unity action on the part of different governments to take action that can further help this situation." In an effort to free up more money for lending, the Federal Reserve today is buying large amounts of what are called "commercial papers," unsecured, short-term debts that help businesses pay day-to-day expenses.
Grassley says he’s uncertain what the Big Eight summit plan will entail, but he’s confident the situation is being addressed. Grassley says, "In the United States, we will not be fully engaged in this until we can get the rescue plan underway. I don’t know whether that’s going to take days or weeks but they’re doing it as quickly as they can."
A U.S. House committee today is holding a hearing on the impact the market free-fall is having on Americans’ retirement accounts. Tonight’s town hall-style debate between presidential candidates John McCain and Barack Obama is expected to be dominated with questions about the economy.