Bernanke meets with House Republicans

/ Source: The Associated Press

Federal Reserve Chairman Ben Bernanke met privately with House Republicans Tuesday, and participants said he steered clear of saying the country is in a recession.

House Minority Leader John Boehner, R-Ohio, told reporters beforehand that the meeting was called because of “great concern about where our economy is headed.”

Bernanke said before the session that he was looking forward to “having a nice, friendly and informative discussion with the leadership here.”

A trio of crises — housing, credit and financial — are threatening to push the country into a deep recession. Home foreclosures have swelled to record highs, employers are slashing jobs and financial companies have racked up billions of dollars in losses from soured investments in mortgage-backed securities. The situation has sent a tremor through Wall Street and official Washington and affected many Americans.

Bernanke’s meeting with House Republicans comes one day before he is slated to go to Capitol Hill to give lawmakers a fresh assessment of economic conditions.

At Tuesday’s meeting, Bernanke didn’t say the economy is in a recession, Rep. Adam Putnam, R-Fla. told reporters after the session. Participants said Bernanke was closely monitoring the economy’s pulse.

On Wall Street, investors began the second quarter in much better spirits. The Dow Jones industrials shot up 391.47 points, buoyed by some hopes that the worst of the credit crisis may have passed.

To try to contain the damage from the sickly economy, the Federal Reserve has aggressively cut a key interest rate to spur buying and investing by people and businesses. It also has taken a series of extraordinary steps in recent weeks and months to prop up the nation’s financial system, which has been in danger of seizing up.

The Fed has backed a multibillion dollar lifeline as part of JP Morgan’s eleventh-hour deal to buy out the troubled Bear Stearns, the nation’s fifth largest investment house. The central bank also — in the broadest use of its credit authority since the 1930s — agreed to temporarily let big investment firms secure emergency financing from the Fed, a privilege that previously had only been granted to commercial banks. Those actions have prompted protests from Democrats and other critics, who contend that the Fed is bailing out Wall Street and putting billions of taxpayers’ dollars at potential risk.