Economy -- Fed in Bailout of Bear: While the Bush administration resists and Congress contemplates fiscal policy options, the Fed took drastic steps to keep the housing sector crisis from spreading into financial institutions, with a temporary bailout out of Bear Stearns, an investment bank with massive subprime mortgaged-backed asset exposure. The Fed meets again tomorrow; speculation centers on a federal funds rate cut of 50-100 bp.

• Statement this morning by President Bush
• Brookings Paper: Policy Options
• NYT Editorial

Budget Resolution -- A Recess to Resolve: With the passage of the House and Senate FY 09 budget resolutions last week, attention turns to the conference committee, which will likely be appointed and begin negotiations during the two-week congressional recess, which begins today. FY09 Budget Docs: President's Budget, Budget Resolutions, etc. Federal Contracting -- A Different Housing Crisis: Senate Banking, Housing and Urban Affairs Committee Chair Chris Dodd (D-CT) is investigating allegations that HUD Secretary Alphonso Jackson acted improperly in granting federal contracts and that the Department has abused taxpayer funds and acted improperly in federal contracting. Dodd-to-Jackson http://banking.senate.gov/_files/031208_DoddtoJackson.pdf" target="_blank"> Letter.