LEXINGTON, Mass., Sept. 15 (UPI) -- Global Insight's chief U.S. financial economist called for an emergency cut in federal lending rates in response to the fall of Lehman Brothers Holdings.
New York investment bank Lehman Brothers announced Monday it would file for Chapter 11 bankruptcy protection.
"Without a very aggressive response from the Fed on rates, the threat to the financial system and the economy from further declines in asset prices is huge," Brian Bethune wrote in response.
Bethune wrote the lack of a direct federal bailout "is understandable" and the broadening of lending programs announced by major global banks "may help ease the shock."
However, "we should not delude ourselves into thinking that without a significant move from the Fed there will not be further tightening of credit conditions as a result of the events over the weekend," he wrote.
Absent a rate cut, there will be pressure on the U.S. Congress to respond with a move that would require taxpayer funding "and burden American households with additional government debt for years to come," he wrote.
