Fearing the stock market's swoon could jeopardize the economy, Wall Street and Main Street are looking to the government for help. A look at the tools the government can wield to boost the economy and restore investor confidence.
Q: Investors have seen more than $7-trillion in wealth evaporate since the stock market peaked in March 2000. Can't the government do something?
A: Mindful of the political fallout from a sinking economy, President Bush has been trying to reassure investors that he will be relentless in cracking down on the corporate fraud that has pushed stocks lower this year. On Wall Street, Bush pledged, "My administration will do everything in our power to end the days of cooking the books, shading the trust and breaking our laws."
He called on Congress to pass a package of reforms, including doubling prison terms for corporate crooks. By executive order, Bush created a financial crimes SWAT team at the Justice Department.
Q: But since that speech, Wall Street has endured its worst two-week plunge since the 1987 stock market crash. Why didn't the president's tough talk have any impact?
A: Bush and Congress have received praise for moving forward with reform packages to prevent future accounting scandals. But analysts say the problem right now is a widespread fear that there are a number of ticking time bombs from questionable bookkeeping in the past that have yet to be exposed. Until that danger passes, analysts predict the stock market will remain jittery.
Q: With the stock market falling so much, why hasn't the government implemented the circuit breakers that were put in place after the October 1987 crash to halt trading when the market is plunging?
A: The Securities and Exchange Commission, which administers the circuit breaker rules, designed them to keep the market from falling too much on a single trading day. The threshold for such a trading halt was put at a very high level _ a 10 percent decline in the Dow Jones industrial average _ to make sure circuit breakers were employed only in extraordinary circumstances.
The Dow's 234.68 point decline on Monday represents a drop of 2.9 percent _ far below the trigger point. The market has suffered a single-day decline of 10 percent or more on just three occasions. The biggest one-day drop was 22 percent on Oct. 19, 1987.
Q: Has Federal Reserve Chairman Alan Greenspan lost his magic? He tried to reassure the nation last week with a generally upbeat assessment of the economy, but Wall Street continued to tank.