The current financial crisis in the United States may prove to be worse than the one seen in 1990-91, said Federal Reserve Bank of Minneapolis President Gary Stern.

However, Stern refused to comment on whether the United States is headed for a recession, calling it an "open question."

He said he can't defend all of the Federal Reserve's actions since the housing crisis began, and said markets remain volatile despite moves to shore up confidence. Still, he said, it is a top Fed priority to regain regular market functioning.

Stern would not comment on whether there was a further need to cut interest rates, or whether the second stimulus package introduced by the Fed, the so-called Money Market Investor Funding Facility introduced today, was needed.

By Megan Ainscow
©CEP News Ltd. 2008