Bernanke: Obama stimulus helps, more action needed

By JEANNINE AVERSA and JANE WARDELL, AP Business Writers
Tue Jan 13, 3:33 pm ET

LONDON – A mammoth stimulus package being crafted by President-elect Barack Obama could give the economy a much-needed lift, but other steps must be taken to bolster the wobbly financial system and for any recovery to stick, Federal Reserve Chairman Ben Bernanke said Tuesday.

Specifically, Bernanke suggested the government inject more money into banks. He also offered options to deal with rotten mortgages and other bad assets held by financial institutions, a problem that has contributed to a lockup in lending. Bernanke also again called for the government to do more to curb home foreclosures.

The Fed chief's extensive remarks, in a speech at the London School of Economics, come at a critical time as the U.S. gets ready to change its political and economic guard from President George W. Bush to Obama next week.