President Bush appeared Tuesday morning in the Rose Garden to announce a new four-point plan to buck up the nations banking system, describing the measures as temporary but necessary steps to preserve the free-market system. Bushs remarks and a separate appearance by Treasury Secretary Henry Paulson were timed to occur before the stock market opens, an apparent attempt to assure markets that have been on a dramatic roller coaster ride for much of October.
Itll take time for our efforts to have their full impact, but the American people can have confidence about our long-term economic future, Bush said. With confidence and determination, we will return our economy to the path of growth and prosperity.
The initiative is headlined by what is expected to be a $250 billion program to allow the government to buy stakes in U.S. banks. Bush said funding is to be drawn from the $700 billion bailout fund approved by Congress before it left town earlier this month money that was intended to buy up bad mortgage debt.
In an effort to loosen the gummed-up lending system, the president also said the Federal Deposit Insurance Corp. will guarantee most new debt issued by banks. The FDIC will also expand government insurance to cover all noninterest-bearing transaction accounts, which are used primarily by small businesses.
Finally, as part of an effort to ease short-term financing for businesses and financial institutions, the Federal Reserve will soon finalize work on a new program to serve as a buyer of last resort for short-term commercial paper.