WASHINGTON, Oct. 14, 2008
Bush Outlines $250B Bank Share Buy-Up
U.S. Will Invest Funds Allocated By $700 Billion Bailout Package In Big Banks
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"With confidence and determination we will return our economy to the path of growth and prosperity," President George W. Bush said in a statement Oct. 14, 2008. (AP)
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Federal Reserve Chairman Ben Bernanke, left, and Treasury Secretary Henry Paulson. (AP Photo/Evan Vucci)
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Timeline
Financial Meltdown
Track major events that lead to one of the most tumultuous times in Wall Street's history.
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Credit Crunch
Feeling the squeeze? Here's a look at actions and statements from key players in Washington.
Mr. Bush, in the latest of a series of statements on the troubled economy, said in a brief Rose Garden statement that the move echoed similar bold moves made overseas in an effort to prevent a global recession.
The announcement propelled the Dow Jones industrials up more than 300 points in the first minutes of trading Tuesday and followed the Dow's historic 936-point jump Monday, when investors were buying in anticipation of the government's plan.
The president made his statement after an early morning meeting with his economic advisers, announcing these steps:
Mr. Bush said this will help banks continue to make loans to businesses and individuals.
"These efforts are designed to directly benefit the American people," Mr. Bush said. He added: "With confidence and determination we will return our econ to the path of growth and prosperity."
He said that the partial nationalization of the nation's battered financial sector was a short-term move to help banks to be able to begin lending again.
"Government's role will be limited and temporary," the president pledged.
Treasury Secretary Henry Paulson, at a news conference a short time later, said "today's actions are what we must do to restore confidence in our financial system."
"We regret having to take these actions," said Paulson. "Today's actions are not what we ever wanted to do - but today's actions are what we must do to restore confidence to our financial system."
It was the latest in a series of moves by the government in an effort to combat a global credit crisis that is threatening to push the United States into a deep recession.
New York Times columnist and Princeton University economics professor Paul Krugman, who was awarded the Nobel Prize in Economics on Monday, told CBS' The Early Show the bank investment "is what the doctor ordered, as far as we can tell."
Economist Lakshman Achuthan agreed that the government's investment in the banks was a necessary move for their survival.
"If the U.S. Treasury, the U.S. Government, is putting the full faith and credit of the United States behind an institution, a company, the company is not going to fail," Achuthan told CBS News correspondent Anthony Mason.
The Federal Reserve, meanwhile, announced Tuesday that it will begin buying massive amounts of short-term debt on Oct. 27 - its latest effort to break through a credit clog. The Fed is invoking Depression-era emergency powers to buy commercial paper - a crucial short-term funding that many companies rely on to pay their workers and buy supplies. Last week the Fed said it intended to take the action but didn't specify when.
Fed Chairman Ben Bernanke welcomed all the new steps and said he believes they will help ease problems plaguing financial markets and threatening the economy. However, he also made clear that policymakers would continue to take actions as needed to battle the crisis.
"Our strategy will continue to evolve and be refined as we adapt to new developments and the inevitable set backs," he said. "But we will not stand down until we have achieved our goals of repairing and reforming our financial system and thereby restoring prosperity to our economy."
Executives of the biggest U.S. banks were summoned to a remarkable meeting at the Treasury Department on Monday to be briefed on the plan. Treasury Secretary Henry Paulson basically told the bank CEOs that they had to accept the government stock purchases for the good of the U.S. economy.
The administration plans to spend $250 billion of the $700 billion government rescue program passed by Congress on Oct. 3 to make stock purchases this year. The first purchases will be in nine large banks, officials said.
Paulson was expected to outline details of the plan at a Treasury Department news conference.
Earlier Monday, stocks soared around the world in response to dramatic government economic relief efforts in the U.S. and overseas.
"Over the past few weeks, my administration has worked with both parties in Congress to pass a financial rescue plan. Federal agencies have moved decisively to shore up struggling institutions and stabilize our markets," Mr. Bush said. "And the United States has worked with partners around the world to coordinate our actions to get our economies back on track."
Quote
Nobel Laureate, Economics
He called the decision for the government to buy stock in the distressed banks "an essential short-term measure to ensure the viability of America's banking system."This is what the doctor ordered, as far as we can tell.
Paul KrugmanNobel Laureate, Economics
It does put the United States in the awkward position of owning shares in institutions it also regulates. The shares purchased by the government are expected to be nonvoting ones.
"The truth is that no one is sure it will work," Krugman told The Early Show. "There's going to be manic depressive markets," he said. "There may be moments of depression coming along."
Krugman said the White House's maneuvers, while welcome, were unlikely to stave off the looming economic recession, and, he said; "It looks like a nasty recession.
"There's a lot of momentum behind it."
© MMVIII, CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.
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See all 132 CommentsIts funny how the world government institutions are flocking to this new world of to maintain power and order - fake money up the kazoo.
Bible dictates the reign of the Beast 7 years.
Posted by spotter444
Were really past these types of comments. Those of us who work hard are already paying for this mess.
Also, the ones who overspent pay taxes too and probably work hard as well. By the way, if they aren''t assisted it will cost us more in the long run.
Posted by spotter444
Let''s start with the loss in property value. Wait until you need to refinance. The price is already being paid.
Thanks God, its about time the Middle Class got some relief.
Oh, its for those bankers...
well, socialism for SOMEONE, anyway...
Well, that should take care of the c-level exec''s perks, salaries, and bonuses for this year.
Obama is going to have to work hard to out-bribe the S.O.B.s next year.
Brian: Every last cent we give to these criminals must become equity in the institutions that receive it, otherwise it is simply a scam.
Not just $250 billion, but all of the now $850 billion, which anyone with even a rudimentary knowledge of the problem knows, will grow to over $2 trillion.
The lesson for the rest of us?
The only way you''ll EVER get ahead is to hold the government hostage.
Obama said today in a speech he will remove the capitol gains tax on small business growth earnings.
Their is no such thing.
Again he does not know what he is talking about, and is mnaking empty promises to the masses who want the handouts.
Posted by spotter444
THIS IS A FACT...CHECK
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Posted by vietname21 at 08:10 PM : Oct 13, 2008
Actually what he was refering to:
http://www.allbusiness.com/marketing/market-research/875438-1.html
McCain has lots of experience here from his Keating 5 days and Savings and Loan debacle, also Republican led.
We can see now why we just had to rush to get this done and spent, in a final tribute to his buddies George paid them off and who voted with this jerk 90+% of the time? McCain.
George will do more damage in his final days in office, just watch. Who will vote with him? McCain as he struggles to "Change" his aimless campaign once again.
Posted by alphaa010 at 06:12 AM : Oct 14, 2008
Repetitive literary Massturbation.
Do the news blogs a favor and get your ego jollies off somewhere else.
Repeat pseudo intellectual cut and paste diatribes are an abuse.
8:00 President Bush Will Make Statement on Economy
My fellow Americans in order to protect my friends and have a job once I leve, I''m using you tax dollars to fatten their wallets. This move will protect you my fellow Americans by covering up their mistakes and errors with your money.
Sadly this move under our watchful eye will mean there are no new toaters or emergency road kits when you open a new account. In a effort to assist all that free stuff you used to get, well, my il pardners, everything will be charged for now. This will stablize nothing but it sounds good.
As a final insult to you all, I''m supporting senator McSame, ooops! McCain, as he knows all about Savings and Loan fvors and voting right along with me over 90% of the time that led to this mess.
I''ve lied to you for 8 years, created panic and fear, broke the country, started a war, lost you savings and retirement and dumbed down your kids with no child left behind and in case you''ve lost your home, you can go to one of your communities faith based places to stay. Oh, sorry, you''re not that faith, Oh well!
If you were thinking you''d get some help filing Bankruptcy, guess what? I changed all that too.
My fellow Americans have a great day, my advice just like on 911, GO Shopping!
What? What was that? Oh, I should have kissed them before I f**ked them? Bigg kissy America, vote for McSame oh *** McCain.
dressed in colors to match his
philosophical approach
to everything,,,
,,, Looking straight ahead, a proud moment,
the world is right with bush tonight,,,
Probably because Lora joined them late.,,,
and he hasn''t yet looked over to see
she dressed in purple instead of red.
This photo-op looked even worse for
Silvio,,,but they cropped out his
standing on a case of Frascati
White Wine to appear a half-inch
taller than Lora.
If you were to sum up the entire Bush
presidency in graphics sans words,,,
George Bush standing next to
Silvio Berlusconi would
seem to do it.
So you are one of the idiots that got him elected in the first place? Good job. Way to go.
"Bolster public confidence in the nation''s financial system."
How does that work??????
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Posted by nomav
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But where is Kaylee? They found a little girls dress by the airport! Is it Kaylees? They spent 3 hours last night talking about it! I never got the answer. I guess I will have to tune in tonoght.
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Posted by presjfk
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This is all the fault of the democrats, not Bush. When will you libs finally take responsibility for the messes you create?
he allows the crisis and then takes the credit for fixing it...
1. Corporations must have transparency The Sarbanes legislation helped some, but the SEC is too prone to interference by wealthy corporate money boys to instill much confidence from me.
2. The middle and lower classes need more disposable income. McCain''s tax cuts go only for the wealthy. We can''t run an economy with 1 % rich and everyone else poor.
3. We need drastic reforms in all our trade policies to ensure a decent living standard for every human being on the planet. . More people with more money means greater market for American products.
4. I want more government regulation with a clearly defined set of health and safety standards devised by consumer advocates, not by wealthy corporations. The label "Made in America" should itself be a warranty, not a warning.
5. I want to see better education . More scholarship and grants enable young people to start businesses, careers, and families faster.
6. We desperately need family planning. The planet cannot adequately accommodate 15 or 20 billion people
7. Finally, we need a sustainable economy. Our current economy, based on fossil fuel, is suicidal. We will either run out of oil, or we''ll gas ourselves to death. The effects of global warming will destroy every one''s portfolio.
I want returns on my portfolio. Only Democrats can give me the results I want.
Posted by presjfk
In the 2004 Congressional hearings....
Posted by JJWALKEN
Bush did all he could to stop the dems from putting us where we are, even bill clinton stated that the dems in congress were on the wrong platform on this issue and are the cause.
Now Bush IS FIXING IT, and deserves to be the HERO!
Posted by CitizenUSA at 09:39 AM : Oct 14, 2008
How exactly did Bush create this? Please be specific.
Posted by irishmail42
Please don''t be ridiculous. Every market in the world follows our market, and the bank take overs were in discussion for weeks here and introduced worldwide when our president called the world to conference to fix the problem.
You Go George!!
The WORLD BEGGED US NOT to elect the WingNut currently in the White House and we IGNORED their pleas. We have PAID FOR IT OVER AND OVER AND OVER AGAIN!
OBAMA 08''!
Posted by CitizenUSA at 09:39 AM : Oct 14, 2008
How exactly did Bush create this? Please be specific.
Posted by easeup
They can''t be specific, because it didn''t happen. Everyone still seems to want to ignore the 2004 Congressional hearings on Fannie, Freddie and ''affirmative banking'' that got us here. Hey Dems, listen to ''Slick Willy'' Clinton explain that the democrats in congress caused the problem.....
www.youtube.com/watch?v=_MGT_cSi7Rs
Between 1999 and 2005 Fannie Mae gave millions to Democratic Causes including Jesse Jackson and ACORN
354 congressional members of both parties got political contributions from Fannie Mae and as reported in the NY Times the top 4 recipients (all democrats) were:
Christopher Dodd # 1 Chariman Banking Housing and Urban Affairs Committee
Barack Obama #2 Federal Financial Management committee
Chuck Schumer #3 Chariman Senate Financial Affairs Committee
Barney Frank #4 Chairman House Finance Committee
In 2003 Bush proposed a new oversight committee to clean up the fraud. Democrats led by Melvyn Watt, defeated the proposal.
Senator John McCain, serving on the Armed Services, Commerce, science and transportation committee warned : %u201CIf congress does not act, American Taxpayers will continue to be exposed to the enornmous risk that Fannie Mae and Freddie Mac pose to the housing market and overall financial system.
So "checkthepast" .....check it yourself you lying idiot.
''A man with experience and facts is not at the mercy of a man with an opinion and an attitude''.
Please say something of substance or nothing at all.
Thank you and have a nice day.
www.youtube.com/watch?v=_MGT_cSi7Rs
If we should all do the opposite of what Bush has proposed in this bail out......how is it that only 58 republicans in the house are following your advice. What did all the others do? Including our two presidential candidates? You guys are wacko raving idiots.
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