Treasury declares recession

WASHINGTON — Wall Street convulsed at the news the country has been in a year-long recession — and a fresh batch of bad economic reports — tanking nearly 680 points.

With the economic pain likely to stretch well into 2009, Federal Reserve Chairman Ben Bernanke said Monday he stands ready to lower interest rates yet again and to explore other rescue or revival measures.

Rushing in reinforcements, Treasury Secretary Henry Paulson, who along with Bernanke has been leading the government’s efforts to stem the worst financial crisis since the 1930s, pledged to take all the steps he can in the waning days of the Bush administration to provide relief. Specifically, Paulson is eyeing more ways to tap into a $700 billion financial bailout pool.

On Capitol Hill, House Speaker Nancy Pelosi, D-Calif., vowed to have a massive economic stimulus package ready on Inauguration Day for President-elect Barack Obama’s signature.

That measure — which could total a whopping $500 billion — would bankroll big public works projects to generate jobs, provide aid to states to help with Medicaid costs and fund renewable energy development. Crafting such a colossal bailout would mark a Herculean feat: Congress convenes Jan. 6, giving lawmakers just two weeks to finish their work for signing on Jan. 20.

To ease the pain, Bernanke said interest-rate cuts are "certainly feasible” but warned of limits.