INSTANT VIEW: Bernanke, Paulson urge action on bailout plan

NEW YORK (Reuters) - U.S. Federal Reserve Chairman Ben Bernanke told the U.S. Congress Tuesday that financial markets are under severe stress and urged immediate action to buy up hundreds of billions of dollars worth of tainted mortgage assets. Treasury Secretary Henry Paulson urged Congress on Tuesday not to weigh down a proposed $700-billion financial system bailout with unrelated provisions that would delay addressing key issues. KEY POINTS: BERNANKE * "Despite the efforts of the Federal Reserve, the Treasury, and other agencies, global financial markets remain under extraordinary stress," Bernanke said in remarks prepared for delivery to the Senate Banking Committee that were obtained by Reuters. * "Action by Congress is urgently required to stabilize the situation and avert what could otherwise be very serious consequences for our financial markets and our economy," he said. PAULSON * "We saw market turmoil reach a new level last week, and spill over into the rest of the economy," Paulson said in testimony prepared for delivery later on Tuesday to the Senate Banking Committee and obtained by Reuters. * "We must now take further, decisive action to fundamentally and comprehensively address the root cause of this turmoil." * He said removing illiquid assets from markets through the proposed bailout will cost taxpayers less in the long run than having credit markets fail to work. He said Congress should "avoid slowing it down with other provisions that are unrelated or don't have broad support." COMMENTS: LENA KOMILEVA, G7 MARKET ECONOMIST, TULLETT PREBON, LONDON: "The policy war on the financial crisis is as much about the psychological impact as about real intervention. It's no surprise therefore that the engineers behind the bank remedy plan are calling for fast implementation. "We shouldn't forget of course that this is a highly charged political environment, and sending a message to the markets that there is a strong momentum behind the plan is as much a confidence stabilizer as a route to building consensus between all the political interests that need to be satisfied." BORIS SCHLOSSBERG, DIRECTOR OF CURRENCY RESEARCH, GLOBAL FOREX TRADING, NEW YORK: "Bernanke and Paulson did not really say anything new in their prepared remarks. The markets didn't react. I think the real action will come during the question and answer forum because the legislators will actually grill them on the plan. They're going to ask why this plan is necessary and could it have been done differently." KEVIN KRUSZENSKI, HEAD OF LISTED TRADING, KEYBANC CAPITAL MARKETS, CLEVELAND, OHIO: "I think he's really pushing Congress to come to a quick resolution here. The tone out of Washington has taken a little bit of a nasty tone and I think he is trying to get people to leave the partisan thoughts aside. "I think people might be getting hung up on the regulation a bit as opposed to putting together a solution that would be good for the whole financial system. I think the market already reacted to the gridlock in part yesterday. "Bernanke tends to give a balanced testimony and this is par for course. I think maybe one of the reasons this was leaked was that there wouldn't be pent up anxiety ahead of the testimony, the key is to keep the market calm." PETER BOOCKVAR, EQUITY STRATEGIST, MILLER TABAK & CO., NEW YORK: "They are defending their plan as they are expected to. It hasn't passed yet so they are basically two car salesmen trying to sell the plan not only to Congress, but to the American people. "I think that's what they are trying to do here by talking about the 'imminent danger' if we don't pass this ... "I have more trust in the private sector in its ability to de-lever than the government using taxpayer dollars to bail everyone out. We've set an awful precedent in the direction that these two guys have gone down. "Many people love them and revere them and think that everything they do is going to be fine. I think it is going to be causing a lot more problems than if we did not have this. I still believe in private sector solutions for these issues, not these massive bailouts. "I think the action on the dollar yesterday is evidence of what people think this plan will bring." MATT MCCALL, PRESIDENT PENN FINANCIAL GROUP, RIDGEWOOD, NEW JERSEY: "From what I'm seeing and hearing, Bernanke is basically putting pressure on Congress to do something right now. Maybe he's not as bearish as he may sound. Obviously he sounds concerned. "I think it's probably just more of a ploy to put some pressure on Congress but I don't think he should be speaking like that unless he felt that way because that's obviously going to put pressure on the stock market." ʘ