* Global markets under "extraordinary stress" --Bernanke
* Bernanke, Paulson urge quick action on US bailout
* Bernanke, Paulson due to testify before Senate panel
* Oil price drop offers a positive underpinning
(Recasts first paragraph, adds byline, updates prices)
By Ellis Mnyandu
NEW YORK, Sept 23 (Reuters) - U.S. stock index futures fell
on Tuesday after Federal Reserve Chairman Ben Bernanke said
global financial markets face extraordinary stress, and he
urged Congress to act quickly on a proposed $700 billion
financial system bailout.
In testimony to be delivered to a Senate committee and
obtained by Reuters, Bernanke said, "Action by Congress is
urgently required to stabilize the situation and avert what
could otherwise be very serious consequences for our financial
markets and our economy."
Investors worry that political wrangling might snag the
passage of what is likely to be one of the costliest U.S.
bailouts since the Great Depression.
Influential Oppenheimer & Co bank analyst Meredith Whitney
cut her outlook on U.S. banks, saying the government bailout
plan has little hope of improving core fundamentals over the
near and medium term. She forecast more dividend cuts by banks.
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Congressmen and analysts are concerned about what would be
the ultimate cost of the measure and its impact on the budget
deficit, the outlook for the dollar and inflation.
Financial shares were poised to weigh on the market as they
did heavily on Monday. Shares of Bank of America <BAC.N> ,
JPMorgan Chase <JPM.N>, Wells Fargo <WFC.N> and Washington
Mutual <WM.N> all drifted lower before the bell, albeit in
light trade.
"From what I'm seeing and hearing, Bernanke is basically
putting pressure on Congress to do something right now," Matt
McCall, president of Penn Financial Group in Ridgewood, New
Jersey.
"I think it's probably just more of a ploy to put some
pressure on Congress, but I don't think he should be speaking
like that unless he felt that way because that's obviously
going to put pressure on the stock market."
S&P 500 futures <SPc1> fell 5.40 points but were above fair
value, a formula that evaluates pricing by taking into account
interest rates, dividends and time to expiration on the
contract. Dow Jones industrial average futures <DJc1> slipped
45 points and Nasdaq 100 <NDc1> futures declined 4.25 points.
A drop in oil prices might offer the broader market some
support, with U.S. front-month crude <CLc1> down $2 at $107.33
a barrel.
Led by Treasury Secretary Henry Paulson, officials are
working on a solution to mop up hundreds of billions of dollars
worth of bad mortgage debt on the books of financial
institutions.
Paulson, Bernanke, Securities and Exchange Commission
Chairman Christopher Cox and James Lockhart, director of the
Federal Housing Finance Agency, are due to testify before the
Senate Banking Committee starting at 9:30 a.m. (1330 GMT).
(Editing by Kenneth Barry)
