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Fed Sees Economic Woes Spilling Into 2009

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Federal policy makers have concluded that the turmoil plaguing the housing and financial markets is likely to spill deep into 2009, becoming one of the most significant domestic problems to confront the next president when he steps into the White House in January.

Ben S. Bernanke, the chairman of the Federal Reserve, publicly indicated on Tuesday that he believes the problems will persist into next year when he outlined a series of steps the Fed is considering in the coming months.

One such step would extend low-interest lending programs to Wall Street's largest investment banks into next year. The programs, one of which was set to expire in September, can continue only if the Fed issues a finding that there are "unusual and exigent circumstances" that justify them.

Mr. Bernanke also recommended that Congress grant the Fed broader authority to monitor and supervise the financial markets to assure greater stability in the future. But with time running out on this session, lawmakers are unlikely to adopt such legislation before next year.

Read the whole story at New York Times