Copyright 2009 Gannett Company, Inc.All Rights Reserved USA TODAY

4 March 2009 Wednesday FIRST EDITION

SECTION: MONEY; Pg 6A

LENGTH: 390 words


TITLE: Bernanke: the stability needed for recovery; Fed chief said additional aid is needed to AIG

Signature: Sue Kirchhoff

WASHINGTON - Federal Reserve Chairman Ben Bernanke warned Congress Tuesday that the economy could stagnate for years unless the financial system is stable, as lawmakers criticized the government's decision to provide insurance giant American International Group with another 30 billion dollars in aid.

Bernanke said the Fed and the Treasury had no choice but to provide capital to AIG and the problem banks deemed too big to not like the U.S. and global economies weaken. The government has provided trillions of dollars of funding since the credit crisis erupted in 2007. Bernanke said May be necessary.

"If there's one episode in the entire 18 months that has made me more angry, I can not think of a (greater) than AIG," Bernanke told the Senate Budget Committee. He said that the firm of insurance regulatory gaps exploited the operation of a hedge fund that is not marked as "irresponsible" and betting is taking huge losses that threaten others.

Treasury Secretary Timothy Geithner said at a hearing, the House that there was "no adult supervision" to AIG.

AIG said Monday the loss of a staggering $ 61.7 billion in the fourth quarter of 2008. The Treasury and the Fed is 30 billion dollars in aid. The funds, to help the company restructure, were at the top of nearly $ 150 billion in assistance earlier.

Bernanke said that without action, the country could face a prolonged episode of economic stagnation. " At one point, he said bluntly that without a stable financial system, "we have no hope of getting the economy to a normal state."

The legislators warned the Fed not to underestimate the depth of frustration about the bailout. Senator Ron Wyden, D-Ore., Said the central bank needed to disclose the names and addresses of banks Fed loans.

"The American people are in the dark on this issue," said Wyden.

Others may fear the proposal for regulation of banks should be closed. "The audience was almost," said Senator Lindsey Graham, RS.C.

Bernanke said that government is trying to gain direct business and consumers. The Fed and the Treasury launched a program Tuesday to $ 200 billion to stimulate $ 1 billion in education loans and auto loans, credit cards and other consumer products. The first loans will be released March 25. Bernanke said that the program will cover commercial real estate, which is facing a "crisis."

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