1 Hurdle Down, Many More to Go for the Economy

USA Today (10/06/08); Lynch, David J.
Critics of the $700 billion plan to revive the U.S. financial system--signed into law by the president on Oct. 3--say it will not be enough to resolve a shortage of capital, among other problems banks are facing. Some top economists believe the government eventually will have to come up with other massive measures, such as closing down insolvent lenders and providing direct financial aid to individual homeowners to curb foreclosures. The Treasury Department will focus on purchasing mortgage-backed securities, with hopes that removing the troubled assets from the balance sheets of financial institutions will enable them to return to normal lending. The latest data show the economy continues to struggle, and many analysts are expecting the Federal Reserve to cut interest rates this month.