Durham professor says he warned lawmakers of financial crisis

Back then, however, lawmakers were unready to act, Professor Steven Schwarcz says.

Now, President Bush is asking Congress for a $700 billion bailout. If they don't approve it, lawmakers risk a cascade of wiped-out retirement savings, rising home foreclosures, lost jobs and closed businesses, the president said in a television address Wednesday night.

As the financial crisis dominated media coverage Wednesday evening, the founding director of the Duke Global Capital Markets Center says he set off alarm bells in nationwide articles nearly a year ago. Schwarcz even spoke before Congress about his plan to save the U.S. markets from what he called a "death spiral."

Schwarcz said the response from lawmakers was, "It makes sense to do this, but there is not the political will.”

Schwarcz called for a governmental group to purchase devalued securities at a discount to shore up and renew confidence in the stock market during panic.

That "is very similar to what the U.S. Treasury is now proposing,” he said.

In the future, Schwarcz said, he would like to see the government create a brain-trust of experts like himself, a group to whom officials could refer when markets start heading in the wrong direction.

"The government is not really appreciating what is happening,” Schwarcz said.

"Many of you cite this as a serious problem, and I agree,” Treasury Secretary Henry Paulson said.

An ABC News-Washington Post poll said Wednesday the public is split about evenly over whether it supports federal "steps" to handle the financial crisis. In a survey released Tuesday by the nonpartisan Pew Research Center, there was nearly 2-to-1 support for the government "potentially investing" billions to try securing the markets.