The government's drastic economic rescue efforts will eventually pay off, President Bush insisted Friday, offering calming words to anxious Americans but no suggestion of a quick revival.
The economy didn't falter overnight, “and it's going to take a while for the credit system to thaw,” Bush said just before the markets opened, speaking across a park from the White House at the U.S. Chamber of Commerce building.
Despite a flurry of radical actions by the Bush administration and the Federal Reserve, banks in the United States and abroad are still wary of lending money to each other and to their customers.
Financial and credit problems have dragged on for more than a year and took a dangerous turn for the worse last month. The fallout threatens to plunge the U.S. economy – as well as the world economy – into a painful recession.
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That has led to erratic trading on Wall Street, where the Dow Jones industrials have swung widely, slashing a trillion dollars of wealth from the markets one day and piling some of it back on the next. The Dow seesawed between positive and negative territory Friday, closing down slightly.
Bush defended the government's recent interventions into private business, which would have been extraordinary for any U.S. administration but have been particularly so for a Republican president.
“I would oppose such measures under ordinary circumstances,” Bush said. “But these are not ordinary circumstances.”
Bush said the steps are “big enough and bold enough to work.”
Earlier this week, the Treasury Department announced it would inject up to $250 billion in U.S. banks in return for partial ownership stakes, something that hasn't been done since the Great Depression of the 1930s. The government hopes banks will use the capital infusions to rebuild their reserves and bolster lending to customers.
“We took this measure as a last resort,” Bush said.
At the same time of the Treasury announcement, the Federal Deposit Insurance Corp. said it would temporarily guarantee new issues of bank debt – fully protecting the money even if the institution fails.