Bush: ‘Pivotal moment’ in U.S. economy
President Bush on Friday said the U.S. economy is facing a “pivotal moment” and defended his administration’s decision to buy up billions of dollars in bad debts as “essential” to preventing a meltdown.
“We must act now to protect our nation’s economic health from serious risk,” Mr. Bush said in a statement to reporters at the White House.
The president said that despite the series of already blockbuster moves made by the Treasury and Fed this week, more action is needed. We must address the root cause behind much of the instability in our markets: mortgage assets that have lost value during the housing decline and are now restricting the flow of credit, he said. America’s economy is facing unprecedented challenges, and we are responding with unprecedented action.
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Mr. Bush, standing with Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and Securities and Exchange Commission Chairman Christopher Cox, said that the nation will weather this challenge and we must do it together.
The president addressed growing concerns among some lawmakers and economists about the government’s actions of the past week.
Our system of free enterprise rests on the conviction that the federal government should interfere in the marketplace only when necessary, he said. Given the precarious state of today’s financial markets and their vital importance to the daily lives of the American people, government intervention is not only warranted, it is essential.
The president acknowledged that these measures will require us to put a significant amount of taxpayer dollars on the line.
This action does entail risk, but we expect that this money will eventually be paid back, he said. The risk is — of not acting would be far higher.
Further stress on our financial markets would cause massive job losses, devastate retirement accounts and further erode housing values, as well as dry up loans for new homes and cars and college tuitions. These are risks that America cannot afford to take.
Mr. Bush said the time to debate the origins of this problem will be later.
Now is the time to solve it, he said.
Mr. Bush also tried to reassure average investors that their money in savings and checking accounts is insured and won’t be lost.
The [Federal Deposit Insurance Corporation] has been in existence for 75 years, and no one has ever lost a penny on an insured deposit, and this will not change, he said.