Lawmakers Warned Wall Street Crisis So Bad Economy Could Literally Die

How bad is the U.S.’s current economic crisis? So bad that news stories now emerging detail mega-grim, catastrophic scenarios Treasury Secretary Henry Paulson and Federal Reserve Chair Ben Bernanke laid out for lawmakers from both parties yesterday — scenarios that have spurred members of both parties to put aside differences and move quickly to act on proposed solutions.

The details aren’t pretty and are downright mind-boggling. For instance, The Swamp has this:

Sen. Charles Schumer of New York appeared on the CNBC’s “Power Lunch” today and described for the audience the doomsday scenario delivered by Treasury Secretary Henry Paulson and Federal Reserve Chair Ben Bernanke during their meeting last night with members of Congress.

SEN. SCHUMER: Well, if the credit markets remain frozen and no one can get loans and banks can’t transfer, then the whole economy basically comes to a halt. There is no — there’s no lending. No one buys cars, because you can’t get a car loan. People don’t go to stores, because you can’t get a credit card loan. Small businesses don’t grow and even some of them don’t continue, because they can’t get a line of credit.

The picture that was painted was not that just Wall Street firms were having trouble, but all of our financial markets, and the potential of a long freeze in the veins of our system as — could kill the patient.

The New York Times:

It was a room full of people who rarely hold their tongues. But as the Fed chairman, Ben S. Bernanke, laid out the potentially devastating ramifications of the financial crisis before congressional leaders on Thursday night, there was a stunned silence at first.

Mr. Bernanke and Treasury Secretary Henry M. Paulson Jr. had made an urgent and unusual evening visit to Capitol Hill, and they were gathered around a conference table in the offices of House Speaker Nancy Pelosi.

“When you listened to him describe it you gulped,” said Senator Charles E. Schumer, Democrat of New York.

As Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Banking, Housing and Urban Affairs Committee, put it Friday morning on the ABC program “Good Morning America,” the congressional leaders were told “that we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.”

Mr. Schumer added, “History was sort of hanging over it, like this was a moment.”

When Mr. Schumer described the meeting as “somber,” Mr. Dodd cut in. “Somber doesn’t begin to justify the words,” he said. “We have never heard language like this.”

“What you heard last evening,” he added, “is one of those rare moments, certainly rare in my experience here, is Democrats and Republicans deciding we need to work together quickly.”

Grim. But the reason why you can expect to see politicos in Congress scrambling to work with the White House on this one — even as the recriminations continue on the Presidential campaign trail.