President Bush says federal action to prop up U.S.-based financial giant Citigroup is part of an ongoing effort to rescue America's troubled financial sector. VOA's Michael Bowman reports from the White House, where officials say they see signs that stability is beginning to return to the U.S. banking system.
President Bush says America will recover from difficult economic times, and that the first step to recovery is to protect the financial system. Mr. Bush says that includes Citigroup - one of the country's best-known names in banking and consumer credit.
"We have made these kinds of decisions in the past - [we] made one last night. And if need be, we're going to make these kinds of decisions to safeguard our financial system in the future," he said.
Mr. Bush spoke after meeting with Treasury Secretary Henry Paulson, the architect of the administration's response to the financial crisis. He said he had consulted with President-elect Barack Obama on the decision to aid Citigroup, which involves a direct $20 billion government investment in the firm, as well as federal guarantees for hundreds of billions of dollars of debt held by the corporation.
Shortly after Mr. Bush made his comments, President-elect Obama held a news conference to present his economic team, most notably his choice for Treasury Secretary, Federal Reserve official Tim Geithner.
The President-elect pledged to honor financial commitments made by the Bush administration under the rescue package, and to expand government assistance to include average Americans harmed by the economic downturn. Mr. Obama stressed there are no quick fixes to the financial crisis.
Citigroup, which has seen its stock plummet in recent months, becomes the latest major financial firm to receive emergency federal assistance in the wake of a rash of home foreclosures and loan defaults that have shaken the U.S. and global economy. The funds come from a $700 billion financial rescue package Congress approved last month, of which roughly 40 percent has been spent to date.
White House spokesman Tony Fratto says President Bush is determined to take a proactive approach to stemming the financial crisis in the remaining weeks of his administration.
"We do not want to wait until firms are, in fact, failing and it is impossible to rescue them. We want to prevent those events from taking place, and not just limit damage to the economy but also remember to support the capital positions of these banks so that they can play the very critical role they play in the economy, which is to be out there making loans," said Fratto.
Fratto said the strategy is already beginning bear fruit. He said many banks are showing improved balance sheets, putting them in a stronger position to lend money to businesses and consumers to support economic activity.
At the same time, the spokesman noted that economic recovery will not come in what he termed "a straight line", and that further challenges lie ahead.