Fed Backs New Stimulus Plan

Fed Chairman Ben Bernanke called for a new stimulus plan to pump cash into the flagging US economy on Monday as stock markets worldwide bounced back from recent lows.

In remarks to the House of Representatives budget committee, Bernanke said the US economy risked a "protracted slowdown," and that US lawmakers were right to consider a second stimulus plan this year as activity slows across the country.

"With the economy likely to be weak for several quarters and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate," said Bernanke.

These remarks came after a report was published which predicts that the financial crisis could push worldwide unemployment to a record high.

Also yesterday, U.S. Treasury Secretary Henry Paulson came out with more details concerning the U.S. rescue plan that was recently passed. He stated that banks had until November 14 to apply for some of the 250 billion dollars that have been set aside for capital injections by the government.

Paulson said "a broad group of banks of all sizes" had shown interest in a capital injection in exchange for preferred shares, or partial nationalizations.