Bush announces banks bailout plan

Published: Wednesday October 15, 2008

President George W. Bush yesterday announced a $250 billion plan by the United States government to directly buy shares in the nation's leading banks, saying the drastic steps were "not intended to take over the free market but to preserve it."

Nine major banks will participate initially including all of the country's largest institutions, he announced, in a move that sent stocks soaring on Wall Street.

Some of the nation's largest banks had to be pressured to participate by Treasury Secretary Henry Paulson, who wanted healthy institutions that did not necessarily need capital from the government to go first as a way of removing any stigma that might be associated with banks getting bailouts.

"We regret having to take these actions," Paulson said.

"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 long series of moves taken by the administration and the Federal Reserve over the past several weeks to prop up a weakening financial industry. The economic picture in the United States had been darkening for months, but the slump took on new urgency – and had greater global repercussions – amid record-setting sell-offs on Wall Street and enactment of a $700 billion bail-out bill.

Under the new multifaceted stabilisation programme described yesterday, the government will initially buy stocks in nine major United States banks. When financial markets stabilise and recover, the banks are expected to buy the stock back from the government, Bush said in brief remarks from the White House Rose Garden.

"These efforts are designed to directly benefit the American people by stabilising the financial system and helping the economy recover," he said.


Source: Nation Newspapers
http://www.nationnews.com/story/305418964211163.php