Paulson, Bernanke Propose Financial Fix-Up

Meeting at Capitol Hill late Thursday, Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke spoke with members of the House and Senate to discuss the current state of the financial world. According to reports from the Wall Street Journal, the two officials will work through the weekend in an effort to design a series of programs that will halt, or at least slow down, rapidly deteriorating financial conditions. The clean-up is being called the largest intervention in the financial markets since the 1930's.

So far, the officials have considered several possibilities:

• create a mechanism that would take bad assets off the balance sheet of certain financial companies. Although the plan was first rumored to resemble the Resolution Trust Corp. used in the 80's, the WSJ says the new entity is no longer expected to mirror the RTC.
  
• create federal insurance for investors in money-market funds, effectively protecting consumers investing in even the safest instruments.
  
• ban short-selling on financials temporarily.

Although the government has only just begun addressing this financial crisis, the markets already appear to be responding: DJIA futures are currently up 169 points, Nasdaq futures are up 32, and S&P 500 futures are up 27.

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