Reid: No one knows how to respond to crisis

Senate Majority Leader Harry Reid said Wednesday "no one knows" how to respond to the turmoil on Wall Street, noting that the unfolding federal response has put Congress temporarily on the sidelines.

Speaking to reporters at the Capitol, Reid (D-Nev.) left open the possibility of moving a major overhaul next year of rules governing financial institutions. But he said that cannot be done this year since lawmakers and Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson have yet to figure out the appropriate remedy.

{mosads}"No one knows what to do," Reid said. "This is a different game. We are not playing soccer, basketball or football. This is new game, and we're going to have to figure out how to [handle] it."

He added: "You could ask Bernanke, you could ask Paulson — they don't know what to do. But they are trying to come up with ideas."

Reid said he plans to keep the Senate in a series of pro-forma sessions — where no legislative business occurs but the Senate is technically in session — after the lawmakers leave town at month's end, in order to allow the Senate to respond should the financial crisis take a new turn.

Reid also expressed concern that Paulson and Bernanke kept him in the dark about their plans to bail out insurance giant American International Group with an $85 billion loan.

"I was kind of surprised," Reid said. "I hadn't heard anything from anyone."

Paulson unsuccessfully tried to reach Reid by telephone Tuesday at about 3:30 p.m. In the evening, the treasury secretary and Bernanke met with the majority leader and House and Senate leaders from both parties to tell them they planned to take over AIG in order to avert a worldwide financial panic.

On Wednesday, Reid gave few details of that meeting, other than to say he told the administration officials that he would "try to digest what you've told us and I hope that you will continue keeping us informed."

Senate Majority Whip Dick Durbin (D-Ill.) said on the floor Wednesday morning that he asked Bernanke at that meeting how to avoid further collapses of giant companies and institutions.

Bernanke said, according to Durbin, "We have to step back and look at the whole system of regulation."

While a sweeping overhaul is on hold, Democrats are pushing an economic stimulus package that could cost more than $60 billion. Reid signaled Wednesday that loans for struggling automakers will not be included in that package, but suggested they would try to add language to a must-pass continuing resolution to keep the government running past Oct. 1.