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Kai Ryssdal: The government’s response to the credit crisis so far can best be described as throwing money at it: $200 billion to Fannie Mae and Freddie Mac, $85 billion to AIG, hundreds of billions of dollars more in loans and credits to big financial institutions. But we got to wondering what else Henry Paulson and Ben Bernanke can do in the absence of a government bailout. Our Washington bureau chief John Dimsdale has that story.

John Dimsdale: The Federal Reserve, Treasury and the FDIC have broad powers to lend money, insure assets and inject cash into the banking system as they’ve already done for the likes of Bear Stearns, AIG and Wachovia. Yesterday, after the House rejected the bailout, Treasury Secretary Henry Paulson said that help wasn’t enough.

Tape of Henry Paulson: Our toolkit is substantial but insufficient.

Still, in theory, the Fed even has authority to do just what the congressional bailout authorizes — take bad debts off the hands of struggling banks.

Nigel Gault: I think there is a limit to which the Fed can do that because you’re almost trying through the back door what Congress just said yesterday the government can’t do.

Global Insight economist Nigel Gault.

Gault: The Fed could offer loans against riskier collateral, of course that is bigger and bigger risks for the taxpayer, because ultimately if the Fed makes losses, then the taxpayer would be liable.

The Fed’s other tool is to cut short-term interest rates. But they’re already so low, there’s not much power left in that tool. And using it creates a risk of inflation, says former Treasury economist Bruce Bartlett.

Bruce Bartlett: The taxpayer is going to have to pay one way or the other, and voting down this legislation didn’t do anything to protect the taxpayer. It just means he’s going to have to pay in some other way that may be more costly than the $700 billion.

As of the middle of last week, the Fed had issued emergency loans to investment banks and insurance companies worth more than $400 billion.

In Washington, I’m John Dimsdale for Marketplace.