President Bush says bank bailout is necessary boost to financial system
Treasury Secretary Henry Paulson says the 'hundreds of billions' of taxpayer dollars that would go toward proposed relief program would pay off in market stability.
WASHINGTON — The Bush administration, moving to restore deeply shaken confidence in the nation's economy, unveiled measures today to rescue banks from billions of dollars in bad debts, taking what the president called "unprecedented action" plunging the government deeply into the financial market place.
The measures, which sent the market indexes soaring, involve emergency lending and an attack on short selling of stocks to fight downward pressure on share prices. Government officials and lawmakers are also hard at work on a plan to unfreeze the credit markets by finding a way to take billions of dollars of bad mortgage-backed assets off the books of financial institutions.
President Bush, in a statement from the White House Rose Garden, called the moves "decisive" and necessary to "get our financial system moving again."
"This is a pivotal moment for America's economy," he said. " . . . There will be ample opportunity to debate the origins of this problem. Now is the time to solve It."
The administration's proposals will put massive amounts of taxpayer money at risk, a point the president and Treasury Secretary Henry M. Paulson acknowledged.
"I am convinced that this bold approach will cost American families far less than the alternative: a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion," Paulson told reporters at the Treasury Department.
Asked to elaborate on the size of the taxpayer exposure, Paulson said, "We're talking hundreds of billions [of dollars]. This needs to be big enough to make a real difference and get at the heart of the problem."
Democratic and Republican members of the Senate Banking Committee gathered in the Capitol this morning to demonstrate their willingness to work through the weekend on the Treasury plan, which is expected to be unveiled today after markets close.
"All of us are prepared to do whatever we can this weekend, working with the administration as they present their plan to fashion a proposal here that will get us out of this mess," said Chairman Christopher J. Dodd (D-Conn.).
Dodd and other key lawmakers had a long meeting Thursday night with Paulson and Federal Reserve Chairman Ben S. Bernanke in which they were told that the only way to prevent a financial crisis that would cause deep losses to ordinary Americans was to initiate a sweeping Wall Street rescue plan.
