Greenspan urges quick passage of bailout

Former Federal Reserve Chairman Alan Greenspan, former Republican Cabinet official George Schultz and economist Robert Hall are urging quick congressional approval of a financial rescue plan in a letter to Senate Minority Leader Mitch McConnell (R-Ky.).

In a letter send to Senate Minority Leader Mitch McConnell (R-Ky.) that was obtained by The Hill, Greenspan, Schultz and Hall press for “swift action to relieve the current financial crisis” and acknowledge the situation is the most dire economic crunch since the Great Depression.

{mosads}The three men also threw their support behind the idea of quick and expansive government intervention into the financial market — an idea that many fiscal conservatives in Congress still oppose.

“As a practical matter, at the current stage of the crisis, the only way that financial institutions can continue to function is for the government to provide financial support,” the letter states. “We urgently advocate immediate, extensive action that would maintain the functions of credit markets and prevent a serious economic contraction.”

Greenspan, Shultz and Hall did not endorse any particular deadline for congressional approval, although some House and Senate leaders have expressed worry about a stock market plunge Monday morning.

It is becoming more likely that final congressional approval will have to wait until at least mid-next week, given the Jewish holidays, although a deal on a plan could be at least announced this weekend to head off any market distress.

Greenspan chaired the Federal Reserve from 1987 to 2006.

Shultz served as labor secretary from 1969 to 1970 and treasury secretary from 1972 to 1974 in the Nixon administration and later served as secretary of state from 1982 to 1989 in the Reagan administration.

Hall is an economics professor at Stanford University and a senior fellow at the university’s Hoover Institution. He is also an advocate of the so-called “flat tax” idea, having co-written a book on the issue, and is president-elect of the American Economic Association.