Bernanke warns of recession risk without bailout

WASHINGTON (AP) -- America's central bank chief sees recession looming if Congress doesn't pass a financial industry bailout.

Federal Reserve Chairman Ben Bernanke has bluntly warned lawmakers that it would mean higher unemployment and increased home foreclosures.

In testimony for the Senate Banking Committee, Bernanke said that without a bailout, "the economy will just not be able to recover in a normal, healthy way."

Despite the warning, influential lawmakers in both parties are demanding changes in the White House-backed proposal.

Banking Committee chairman Chris Dodd says, "What they have sent us is not acceptable." Republican Richard Shelby says, "We have got to look at some alternatives."

One key demand is that Wall Street executives not be allowed to walk away from the mess with multimillion-dollar severance packages.

Democratic presidential candidate Barack Obama and his Republican rival, John McCain, agree on that.

(Copyright 2008 by The Associated Press. All Rights Reserved.)

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