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News Wrap: Bernanke Promises to Bolster Recovery If Needed

July 21, 2010 at 12:00 AM EDT
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HARI SREENIVASAN: The chairman of the Federal Reserve promised today to take action in order to bolster the recovery, if need be. At a Senate hearing, Ben Bernanke voiced concern about slowing growth.

BEN BERNANKE, Federal Reserve Chairman: The economic outlook remains unusually uncertain. We will continue to carefully assess ongoing financial and economic developments, and we remain prepared to take further policy actions as needed to foster a return to full utilization of our nation’s productive potential in a context of price stability.

HARI SREENIVASAN: Bernanke played down chances the economy will slide back into recession, but he said record low interest rates need to stay in place for an extended period. The mood on Wall Street turned sour after Bernanke spoke. The Dow Jones industrial average lost 109 points to close at 10120. The Nasdaq fell 35 points to close at 2187. Federal efforts to fight off home foreclosures are not working. That’s what a Senate committee heard today from Special Inspector General Neil Barofsky. He said foreclosure filings continue unabated, despite programs for lenders to modify the terms of troubled home loans. But Barofsky said the U.S. Treasury refuses to set clear goals.

NEIL BAROFSKY, Troubled Asset Relief Program Special Inspector General: Treasury’s continued indications that this is a successful program, without identifying these goals and benchmarks, is simply not credible. And I fear that the growing public suspicion that this program is an outright failure will continue unless and until Treasury adopts this recommendation and comes clean with what its goals and expectations are.

HARI SREENIVASAN: The government has provided up to $50 billion for mortgage modification efforts. But Barofsky said lenders get too much leeway to decide whether to reduce a homeowner’s principal balance. British scientists have found the heaviest star ever spotted in the universe. The star, labeled R136a1, was once 300 times the mass of our sun and remains 10 million times as bright. The report today placed the star in the Tarantula Nebula at the center of a cluster of stars. It’s roughly 165,000 light years from the Milky Way. Those are some of the day’s major stories — now back to Judy.