ID :
20307
Sat, 09/20/2008 - 09:32
Auther :
Shortlink :
http://m.oananews.org//node/20307
The shortlink copeid
Bush calls on Congress to legislate to help federal gov't buy bad assets
By Hwang Doo-hyong
WASHINGTON, Sept. 19 (Yonhap) -- U.S. President George W. Bush called on Congress Friday to pass a measure allowing the federal government to buy bad assets from financial firms suffering from the mortgage crisis amid falling housing prices.
Bush did not specify how much is needed to rescue the failing financial
institutions, but analysts say at least US$1 trillion might be needed to clear
the bad loans from banks and other financial firms.
Joining Bush in the White House Rose Garden were Treasury Secretary Henry
Paulson, Federal Reserve Chairman Ben Bernanke and Christopher Cox, chairman of
the Securities and Exchange Commission.
"Secretary Paulson, Chairman Bernanke and Chairman Cox have briefed leaders on
Capitol Hill on the urgent need for Congress to pass legislation approving the
federal government's purchase of the illiquid assets, such as troubled mortgages,
from banks and other financial institutions," Bush said.
"In our nation's history, there have been moments that require us to come
together across party lines to address major challenges," he said. "This is such
a moment."
Bush, facing the most serious financial turmoil in decades in the waning months
of his second four-year term, defended the government intervention as "a decisive
step that will address underlying problems in our financial system," that "will
help take pressure off the balance sheets of banks and other financial
institutions."
"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."
Critics say the Bush administration has already undermined the free market system
by pouring nearly $900 billion into financial institutions struggling with the
liquidity squeeze so far this year, fearing the federal government is not capable
of spending such a huge amount due to burgeoning trade and fiscal deficits.
"These measures will require us to put a significant amount of taxpayer dollars
on the line," Bush admitted, but added, "This action does entail risk, but we
expect that this money will eventually be paid back. The vast majority of assets
the government is planning to purchase have good value over time because the vast
majority of homeowners continue to pay their mortgages."
"The risk of not acting would be far higher," Bush said. "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."
The Bush administration last week announced a US$200 billion bailout package for
two ailing mortgage giants, Fannie Mae and Freddie Mac, which was followed
Wednesday by a $85 billion takeover of the American International Group, the
world's largest insurer.
The Federal Reserve Wednesday revealed a concerted measure by central banks of
five major economies to pour up to US$180 billion into the global financial
market to help ease the global liquidity squeeze.
In the most recent financial turbulence, Lehman Brothers, the fourth biggest
investment bank in the U.S., filed bankruptcy Monday, and Merrill Lynch, the
biggest brokerage, was subsequently sold to Bank of America for $50 billion. Bear
Stearns collapsed earlier in the year.
Goldman Sachs and Morgan Stanley, two surviving major investment banks, are said
to be under discussions for a possible merger with other financial institutions.
Bush said his administration was ready to update regulations "to meet the
realities of today's global financial system," noting now is not the time to
point fingers.
"Now is the time to solve it," he said. "There will be ample opportunity to
debate the origins of this problem."
The federal government's failure to properly regulate investment banks is partly
blamed for their collapse.
"Finally, when we get past the immediate challenges, my administration looks
forward to working with Congress on measures to bring greater long-term
transparency and reliability to the financial system," Bush said. "Many of the
regulations governing the functioning of America's markets were written in a
different era. It is vital that we update them."
Earlier in the day, the Securities and Exchange Commission announced a ban on
short selling of the stocks of 799 financial companies for the coming two weeks,
preventing speculators from exploiting falling stock prices by borrowing stocks
and selling and repurchasing them to repay.
Paulson also said at a news conference that Bush approved the department's plan
to use up to $50 billion from the assets of the Exchange Stabilization Fund for
the next year to guarantee the payment for the money market mutual fund industry,
both retail and institutional.
Reports said tens of billions of MMF money, once considered the safest, has been
withdrawn in recent days amid the worsening financial turmoil.
hdh@yna.co.kr
(END)
WASHINGTON, Sept. 19 (Yonhap) -- U.S. President George W. Bush called on Congress Friday to pass a measure allowing the federal government to buy bad assets from financial firms suffering from the mortgage crisis amid falling housing prices.
Bush did not specify how much is needed to rescue the failing financial
institutions, but analysts say at least US$1 trillion might be needed to clear
the bad loans from banks and other financial firms.
Joining Bush in the White House Rose Garden were Treasury Secretary Henry
Paulson, Federal Reserve Chairman Ben Bernanke and Christopher Cox, chairman of
the Securities and Exchange Commission.
"Secretary Paulson, Chairman Bernanke and Chairman Cox have briefed leaders on
Capitol Hill on the urgent need for Congress to pass legislation approving the
federal government's purchase of the illiquid assets, such as troubled mortgages,
from banks and other financial institutions," Bush said.
"In our nation's history, there have been moments that require us to come
together across party lines to address major challenges," he said. "This is such
a moment."
Bush, facing the most serious financial turmoil in decades in the waning months
of his second four-year term, defended the government intervention as "a decisive
step that will address underlying problems in our financial system," that "will
help take pressure off the balance sheets of banks and other financial
institutions."
"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."
Critics say the Bush administration has already undermined the free market system
by pouring nearly $900 billion into financial institutions struggling with the
liquidity squeeze so far this year, fearing the federal government is not capable
of spending such a huge amount due to burgeoning trade and fiscal deficits.
"These measures will require us to put a significant amount of taxpayer dollars
on the line," Bush admitted, but added, "This action does entail risk, but we
expect that this money will eventually be paid back. The vast majority of assets
the government is planning to purchase have good value over time because the vast
majority of homeowners continue to pay their mortgages."
"The risk of not acting would be far higher," Bush said. "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."
The Bush administration last week announced a US$200 billion bailout package for
two ailing mortgage giants, Fannie Mae and Freddie Mac, which was followed
Wednesday by a $85 billion takeover of the American International Group, the
world's largest insurer.
The Federal Reserve Wednesday revealed a concerted measure by central banks of
five major economies to pour up to US$180 billion into the global financial
market to help ease the global liquidity squeeze.
In the most recent financial turbulence, Lehman Brothers, the fourth biggest
investment bank in the U.S., filed bankruptcy Monday, and Merrill Lynch, the
biggest brokerage, was subsequently sold to Bank of America for $50 billion. Bear
Stearns collapsed earlier in the year.
Goldman Sachs and Morgan Stanley, two surviving major investment banks, are said
to be under discussions for a possible merger with other financial institutions.
Bush said his administration was ready to update regulations "to meet the
realities of today's global financial system," noting now is not the time to
point fingers.
"Now is the time to solve it," he said. "There will be ample opportunity to
debate the origins of this problem."
The federal government's failure to properly regulate investment banks is partly
blamed for their collapse.
"Finally, when we get past the immediate challenges, my administration looks
forward to working with Congress on measures to bring greater long-term
transparency and reliability to the financial system," Bush said. "Many of the
regulations governing the functioning of America's markets were written in a
different era. It is vital that we update them."
Earlier in the day, the Securities and Exchange Commission announced a ban on
short selling of the stocks of 799 financial companies for the coming two weeks,
preventing speculators from exploiting falling stock prices by borrowing stocks
and selling and repurchasing them to repay.
Paulson also said at a news conference that Bush approved the department's plan
to use up to $50 billion from the assets of the Exchange Stabilization Fund for
the next year to guarantee the payment for the money market mutual fund industry,
both retail and institutional.
Reports said tens of billions of MMF money, once considered the safest, has been
withdrawn in recent days amid the worsening financial turmoil.
hdh@yna.co.kr
(END)
