Sen. Christopher Dodd, meeting business and labor leaders today in Windsor Locks, expressed hope that the stock market will react favorably this week to the $700 billion rescue package signed into law Friday.
But the Dow Jones industrials skidded nearly 500 points and fell below 10,000 for the first time in four years, while the credit markets remained under strain.
Asian and European stock markets also plunged Monday amid fears that the global financial crisis would depress world economic growth.
Dodd, chairman of the Senate Banking Committee and one of the chief architects to the rescue package, was back in Connecticut today for the first time since Congress approved the law last week. Meeting with reporters after a closed-door session with business and labor leaders, Dodd said the package was a necessary step to get credit and capital flowing.
“We’re hopeful we’ll see a better reaction this morning than the one we saw last week,” he said, referring to the stock market.
The rescue package allows the government to spend billions of dollars to buy bad mortgage-related securities and other devalued assets from troubled financial institutions. If the plan works, advocates say, that would allow frozen credit to begin flowing again and prevent a serious recession.
Dodd said approving the package was a necessary, but unfortunate step. “This was avoidable,” he said. “It was not a natural disaster.”
Treasury Department officials must make reports to Congress every 48 hours, Dodd said. The rescue package also created a permanent inspector general and a separate audit to oversee the use of the $700 billion.
Dodd said he expects to see the $700 billion to start distributing sometime next week. He said it is important to get the “poison paper” out of the credit market.
John Olsen, president of the Connecticut AFL-CIO, said the rescue plan is a first step to righting the economy.
“You don’t dig yourself into the hole overnight and you don’t dig yourself out of the hole overnight,” he said.
