Bush Promises More Steps To Avert Crisis
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
WASHINGTON — With the financial markets in turmoil, President Bush said today that he shares Americans’ concerns and the government will act aggressively to avert a deepening crisis.
Mr. Bush was supposed to spend the day in Alabama and Florida raising money for Republicans and talking energy policy. But he canceled the trip to focus on what is unfolding as the worst financial meltdown since the Great Depression.
Aiming to be reassuring and to show that he is working on the problem, he said the markets are adjusting to the “extraordinary measures” that have been taken in recent days by the federal government.
“The American people can be sure we will continue to act to strengthen and stabilize our financial markets and improve investor confidence,” Mr. Bush said in two minutes of remarks delivered outside the Oval Office.
He did not specify what actions would be taken. The president was to meet with economic advisers over much of the day, and was seeing the Treasury Secretary, Henry Paulson, at the White House later today.
“Our financial markets continue to deal with serious challenges,” he said. “As our recent actions demonstrate, my administration is focused on meeting these challenges.”
The market conditions have put the White House into crisis mode. But Mr. Bush has behaved very differently than in previous crises — for instance around the start of the Iraq war, of after Hurricane Katrina hit in 2005, or last month’s invasion by Russia of tiny neighbor Georgia. In those cases, Mr. Bush would talk nearly every day on the issue. This week, he has been notably silent.
His remarks today were his first since Monday. And he has spurned every attempt by reporters to ask questions about the developments, including again today. As he finished his very brief statement and turned to walk back into the Oval Office, a reporter asked if he believed the economy was still sound. The president kept walking.
Despite Mr. Bush’s public stance, the government has taken more and more extensive actions than in decades.
Earlier this month, the administration took over mortgage giants Fannie Mae and Freddie Mac. The two struggling companies, which were created by Congress to help people afford home loans, account for about $5 trillion in home mortgages, about half the nation’s total.
At the start of this week, the Federal Reserve rescued American International Group Inc., an insurance giant, from bankruptcy by granting an emergency $85 billion loan. In the historic bailout, the government gets almost an 80 percent stake in the company, a vastly far-reaching intervention.
Then yesterday, the Securities and Exchange Commission tightened rules on short selling, the practice of betting that a stock will fall.
And today, the Federal Reserve pumped $55 million in temporary reserves into the system after coordinated action with the central banks of other nations. The idea was to flood the global markets with a big cash infusion and both moves were deisgned to prevent credit from drying up and sending the broader economy into virtual paralysis.
Still, Lehman Brothers, the country’s fourth-largest investment bank, filed for bankruptcy protection this week. A weakened Merrill Lynch, deciding it couldn’t go it alone anymore, found help in the arms of Bank of America.
The president and his economic team are monitoring many barometers measuring the status of the nation’s economy.
A private business group reported today that the economy’s health deteriorated for the second consecutive month in August as building permits dropped and unemployment claims rose. Oil prices are rising again as investors eye American financial turmoil. Employers are cutting payrolls. New applications for unemployment benefits are up, partly due to Hurricane Gustav. The housing market remains unstable.