Bush Meets with G-7, Speaks of Crisis
- Oct 11, 2008
President Bush spoke to the public from the Rose Garden Saturday after meeting with financial ministers from the G-7 nations. Bush met with Treasury Secretary Henry Paulson, Secretary of State Condoleezza Rice and finance ministers from the G7 — Canada, France, Germany, Great Britain, Italy, and Japan. With Bush while he spoke were Prime Minister Jean-Claude Juncker of Luxembourg, president of the Eurogroup of countries, managing director Dominique Strauss-Kahn of the International Monetary Fund, president Robert Zoellick of the World Bank, Chairman Mario Draghi of the Financial Stability Forum.Saying it was important for citizens to understand that what “affects Wall Street affects Main Street,” the President noted that the U.S.,playing a special role in the crisis, will take steps immediately. These include the dramatic move to buy into banks directly, as part of injecting funds into them to recapitalize them, a move announced late yesterday by Paulson. The Treasury chief said that a “term sheet” would be offered to needy banks. Bush commented on this step and other moves in the Rose Garden: “To help thaw frozen markets, the Federal Reserve has taken unprecedented measures to boost liquidity. The Securities and Exchange Commission has cracked down on abusive practices in the markets. Federal agencies have significantly expanded the amount of money insured in bank and credit union accounts. My administration worked with the Congress to pass legislation authorizing the government to recapitalize banks by purchasing troubled assets or providing insurance or purchasing equity in financial institutions,” Bush noted. The delays in acting, combined with unfettered deregulation, noted by many commentators, have now plunged the markets into deep distress. He also had praise for the G-7 countries and the “strong measures” they were taking. This despite clear signs that a coordinated effort would not be quite as coordinated as possible–as different countries are taking differing views of the right steps to take during these turbulent economic times. Italy balked earlier Friday at what it characterized as too weak a joint statement. These G-7 “strong measures” were announced late Friday in a joint statement following its Washington meeting. The 5-point plan includes pledges to: “1. Take decisive action and use all available tools to support systemically important financial institutions and prevent their failure. “2. Take all necessary steps to unfreeze credit and money markets and ensure that banks and other financial institutions have broad access to liquidity and funding. “3. Ensure that our banks and other major financial intermediaries, as needed, can raise capital from public as well as private sources, in sufficient amounts to re-establish confidence and permit them to continue lending to households and businesses. “4. Ensure that our respective national deposit insurance and guarantee programs are robust and consistent so that our retail depositors will continue to have confidence in the safety of their deposits. “5. Take action, where appropriate, to restart the secondary markets for mortgages and other securitized assets. Accurate valuation and transparent disclosure of assets and consistent implementation of high quality accounting standards are necessary. “The actions should be taken in ways that protect taxpayers and avoid potentially damaging effects on other countries. We will use macroeconomic policy tools as necessary and appropriate. We strongly support the IMF’s critical role in assisting countries affected by this turmoil. We will accelerate full implementation of the Financial Stability Forum recommendations and we are committed to the pressing need for reform of the financial system.” Details of the implementation of these measures were not spelled out.