The financial turmoil of 2007-08 has deeply affected our nation's households and businesses. What began as a nationwide housing downturn has led to a national and global financial crisis with serious consequences for the real economy. In his Oct. 20 testimony to the House Budget Committee, Federal Reserve Chairman Ben Bernanke summarized the situation as follows:the turmoil is the aftermath of a credit boom characterized by the underpricing of risk, excessive leverage, and an increasing reliance on complex and opaque financial instruments that have proved to be fragile under stress. A consequence of the unwinding of this boom and the resulting financial strains has been a broad-based tightening in credit conditions that has restrained economic growth.
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