With stock markets in free fall U.S. Treasury Secretary Henry Paulson announced on Tuesday that the government’s effort to unlock credit markets would include direct investments of $250 billion in bank equities. He also warned bankers not to hoard the money but to use it to make the loans that lubricate the nation’s economy. In separate interviews Wharton finance professors Richard Marston and Jeremy Siegel tell Knowledge at Wharton that while the investment is not without risk it appears to be the best hope for restoring confidence in credit and stock markets -- and reducing the severity of a recession that is all but certain to come.
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