Bernanke: Tools to Address Crisis Are in Place

The extraordinary series of actions taken by the Treasury Department and federal regulators - which include the injection of capital into the banking system and guaranteed inter-banking lending - should provide enough tools to address the current crisis, Federal Reserve Board chairman Ben Bernanke said. "I am not suggesting the way forward will be easy, but I strongly believe that we now have the tools we need to respond with the necessary force to these challenges," Mr. Bernanke told the Economic Club of New York. The Fed chairman noted that the housing market "continues to be a primary source of weakness in the real economy as well as the financial markets." However, Treasury's plan to purchase troubled mortgage assets from financial institutions should increase liquidity, promote price discovery and unclog the mortgage securities markets, he said. "With time, the provision of equity capital to the banking system and purchase of troubled assets will help credit to flow more freely, thus supporting economic growth."