WASHINGTON (AP) – President Bush emerged from a meeting with foreign financial officials on Saturday and pledged a global response to the credit crisis that will lead toward a “path of stability and long-term growth.”
Bush announced no new strategies to attack the economic woes circling the globe, stressing instead, “We will do what it takes to resolve the crisis and the world’s economy will emerge stronger as a result.”
The president spoke in the Rose Garden outside the White House, joined there in a show of solidarity not long after daybreak by finance officials from the G-7 — Japan, Germany, Britain, France, Italy and Canada, in addition to the United States. Treasury Secretary Henry Paulson and Secretary of State Condoleezza Rice also attended.
“The United States has a special role to play in leading the response to this crisis,” the president said. “That is why I convened this morning’s meeting here at the White House and it is why our government will continue using all the tools at our disposal to resolve this crisis.”
He added, “As our nations carry out this plan, we must ensure that the actions of one country do not contradict or undermine the actions of another. In an interconnected world, no nation will gain by driving down the fortunes of another. We are in this together. We will come through it together.”
Bush’s comments were aimed at avoiding the mistakes that worsened economic conditions during the Great Depression in the 1930s. Then, some nations pursued go-it-alone strategies such as erecting protectionist trade barriers to shield their domestic industries. Those trade barriers ended up only worsening the global downturn.
In the current crisis, Ireland moved to guarantee all bank deposits, a decision that triggered similar actions in Germany and other nations which were concerned that nervous depositors would move their bank accounts to Ireland.
The White House meeting lasted about a half-hour, less than scheduled.
Officials from the Group of 20 countries — which include the wealthiest and the world’s biggest developing nations such as China, Brazil and India — planned to attend a meeting Saturday evening that Paulson requested to explain the actions that U.S. and other wealthy nations have taken.
For Bush, it was the 22nd time in 27 days that he has spoken publicly about the financial crisis.
Finance ministers from the Group of Seven countries, who met in Washington on Friday, announced a five-point plan aimed at reversing the credit crisis. They vowed to take “decisive action and use all available tools to support systemically important financial institutions and prevent their failure.”
“The G-7 agrees today that the current situation calls for urgent and exceptional action,” the joint statement said. The G-7 comprises the United States, Canada, Britain, France, Italy, Germany and Japan.
In addition to their pledge to protect major banks, the leaders also committed to work to get credit flowing more freely again, support the efforts of banks to raise money from both public and private sources, bolster deposit insurance and revive the battered mortgage finance market.
Their statement may not be enough to allay the sense of panic that has swept through global markets in recent weeks after Lehman Brothers collapsed into bankruptcy, triggering a wave of risk aversion that left banks hoarding cash.
“The markets wanted maybe more assurance that there would be a unified global backstopping of the banks, and it doesn’t sound like that’s in there,” said Kim Rupert, managing director of global fixed-income analysis at Action Economics.
On Wall Street, the Dow Jones Industrial Average plummeted nearly 700 points in the opening minutes of trading but made up much of that loss in the last hour of the session. The Dow shed 1,874.19 points for the week, or 18 percent, to close at 8,451.19 - the biggest weekly slide in the history of the 30-stock index. Stock markets in Europe and Asia also took a plunge.
But Treasury Secretary Henry M. Paulson Jr. who, along with Federal Reserve Chairman Ben S. Bernanke, represented the United States at the meeting, said the five-point plan was a bold step that shows the governments of the world’s top economies are serious about dealing with the global market crisis.
“What came out of that meeting was there weren’t differences in what we needed to do,” Mr. Paulson told a gathering of reporters Friday evening. “These action plans were what we all needed to do.”
Mr. Paulson said it was unrealistic to expect the countries to adopt a singular plan to address credit problems in their individual countries.
“Some in the press and some in the markets are naive if they think that different countries with different financial systems, economies in different stages of development … are going to come up with precisely the same policy to deal with the issues,” he said.
Missing from the plan was a British proposal to guarantee loans between banks. British officials have pushed the G-7 to address the root causes of the seizure of the global banking system by recapitalizing institutions and enacting other measures to stimulate interbank lending.
• Click here to view the communique issued Friday by the G7.
Britain this week offered about $87 billion of capital injections to at least eight banks in exchange for equity stakes.
“We need to show that we are able not just to talk about these issues but to step up to the mark and do something about them,” British Chancellor of the Exchequer Alistair Darling told Bloomberg Television. “It is absolutely essential that the world’s largest economies act together, and they act together now.”
The Treasury Department has a $700 billion rescue plan in hand, which it could tap to buy stakes in banks. European leaders have yet to unite behind a similar proposal.
Friday’s meeting was a prelude to scheduled talks Saturday with President Bush, the managing director of the International Monetary Fund and the president of the World Bank. Officials from the Group of 20 nations are expected to meet in Paris this weekend as part of a summit of European leaders.
This article is based in part on wire service reports.