President Bush

PRESIDENT BUSH

ECONOMIC CRISIS SPEECH

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Good Morning . . .

Over the past few days, we have witnessed a startling drop in the stock market, much of it driven by uncertainty and fear. Many of our citizens have serious concerns about their retirement accounts, their investments and their economic well-being.

Here is what the American people need to know:

That the United States government is acting, and we will continue to act, to resolve this crisis and to restore stability to our markets.  We are a prosperous nation with immense resources and a wide range of tools at our disposal.  We are using these tools aggressively.

The fundamental problem is this:

As the housing market has declined, banks holding assets relating to home mortgages have suffered serious losses. As a result of these losses, many banks lack the capital or the competency in each other to make new loans. In turn, our system of credit is frozen, which is keeping American businesses from financing their daily transactions, and creating uncertainty throughout our economy.

This uncertainty has led to anxiety among our people. And that is understandable that anxiety can feed anxiety and that can make it hard to see all that is being done to solve the problem.

The Federal government has a comprehensive strategy and the tools necessary to address the challenges in our economy.

Fellow citizens, we can solve this crisis, and we will.

Here are the problems we face and the steps we have taken:

1. Key markets are not functioning because there is a lack of liquidity, the grease necessary to keep the gears of our financial system turning. So the Federal Reserve has injected hundred of billions of dollars into the system. The Fed has joined with central banks around the world to coordinate a cut in interest rates. This rate cut will allow banks to borrow money more affordably and it should help free up additional credit necessary to create jobs and finance college educations, and help American families meet their daily needs.

The Fed has also announced a new program to provide support for the commercial paper market which is freezing up. As the new program kicks in over the next week or so, it will help provide a key source of short term financing for American businesses and financial institutions.

2.  Some Americans are concerned about whether their money is safe. So, the FDIC and the NCUA (National Credit Union Administration) have significantly expanded the amount of money insured in savings accounts and checking accounts and certificates of deposit. That means if you have up to $250,000 in one of these insured accounts, every penny of that money is safe.

The Treasury Department has also acted to restore confidence in a key element of America's financial system by offering government insurance for money market mutual funds.

3.  We are concerned that some investors can take advantage of the crisis to illegally manipulate the stock market.  So the Securities and Exchange Commission have launched rigorous enforcement actions to detect fraud and manipulation in the market.  The SCC has focused on preventing abusive practices, such as putting out false information to drive down particular stocks for personal gain.  Anyone caught engaging in illegal financial activities will be prosecuted.

4. A decline in the housing market has left many Americans struggling to make their mortgages and are concerned about losing their houses. My administration has launched two initiatives to help responsible borrowers keep their homes. It is called Home Now (spelling?) and brings together home owners and lenders and mortgage services and others to find ways to prevent foreclosures.

The other initiative is aimed at making it easier for responsible home owners to refinance into affordable mortgages insured by the Federal Housing Administration.

So far these programs have helped more than two million Americans stay in their homes.

And the point is this:
If you are struggling to meet your mortgage, there are ways that you can get help.  As these actions help to prevent foreclosures, we are addressing a key problem in the housing market - the supply of homes now exceeds demand, and as a result, home values have declined.

As the supply and demand balance out, our housing market will be able to recover and will help our broader economy to begin to grow.

5. We see that the problems in the financial system are not isolated to the United States. It is also affecting other nations around the globe. So, we are working closely with partners around the world to assure that our actions are coordinated and effective.

Tomorrow, I will meet with the finance ministers from our partners in the G-7 (spelling?) and the heads of the International Monetary Fund and World Bank.

Secretary Paulson will also meet with finance ministers from the world's 20 leading economies.

With these efforts the world is sending an unmistakable signal:
We are in this together and we will get through this together.

6.  Finally, American businesses and consumers are struggling to obtain credit because banks do not have sufficient capital to make loans. So my administration  worked with Congress to pass a $700 billion financial rescue package. This new law authorizes the Treasury Department to use a variety of measures to help banks to rebuild capital including buying or insuring troubled assets and purchasing equity at financial institutions.

The Department will implement measures that have maximum impact as quickly as possible.

$700 billion is a significant amount of money, and as we act,  we will do so in a way that is effective. The plan that we are executing is aggressive.  It is the right plan. It will take time to have its full impact.  It is flexible enough to adapt as the situation changes, and it is big enough to work.

The Federal government will continue to take the actions necessary to restore stability to our financial markets and growth to our economy.

We have an outstanding economic team carrying out this effort lead by the Secretary of Treasury Hank Paulson,  Federal Reserve Chairman Ben Bernanke, SCC Chairman Chris Cox, and FDIC Chair Sheila Bair.   I thank them and their dedicated teams for their service during this important moment in our country's history.

This  is an anxious time, but the American people can be confident in our economic future. We know what the problems are, we have the tools to fix them, and we are working swiftly to do so.

Our economy is innovative, industrious and resilient because the American people who make up our economy are innovative and industrious and resilient.

We all share a determination to solve this problem and that is exactly what we are going to do.

May God Bless You.

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