rodeorector
Global Moderator
Paulson Says U.S. to Use All `Authorities' in Crisis
By Simon Kennedy and Rebecca Christie
Oct. 8 (Bloomberg) -- Treasury Secretary Henry Paulson said U.S. policy makers are prepared to do more if necessary to stem the worst financial crisis since the Great Depression.
The Treasury, Federal Reserve and Federal Deposit Insurance Corp. will ``use all their authorities to promote the process of repair and recovery and to contain risks to the financial system that might arise from problems at individual institutions,'' Paulson said at a press conference today in Washington.
``It is the policy of the federal government to use all resources at its disposal to make our financial system stronger,'' Paulson said. ``We will use all of the tools we've been given to maximum effectiveness, including strengthening the capitalization of financial institutions of every size.''
Paulson spoke two days before finance ministers and central bankers from the Group of Seven industrial nations gather in Washington for their first meeting since the financial crisis deepened last month.
Beyond the G-7 talks, Paulson said he was seeking a ``special meeting'' of finance officials from the Group of 20, which combines developed and emerging economies.
President George W. Bush signed into law on Oct. 3 a measure that gives Paulson the authority to purchase as much as $700 billion in mortgage-related assets from financial institutions saddled with illiquid debt.
Stock Slump
Since then, the Standard & Poor's 500 Index is down about 8 percent, credit markets have tightened further and, earlier today, central banks around the world collaborated to cut interest rates in an unprecedented move to stem the crisis.
``Patience is also needed because the turmoil will not end quickly and significant challenges remain ahead,'' Paulson said. ``Neither passage of this new law nor the implementation of these initiatives will bring an immediate end to current difficulties.''
The Treasury this week is recruiting asset managers and other staff to carry out the rescue plan, which will be administered by a newly formed Office of Financial Stability in the Treasury's headquarters in Washington.
The global economy is headed for a ``major downturn,'' the International Monetary Fund said in its World Economic Outlook released earlier today.
Global growth is projected at 3 percent next year, down from 3.9 percent this year, the IMF said. In April, the IMF predicted a 25 percent chance of worldwide growth at or below 3 percent, which it said was ``equivalent to a global recession.''
``The turmoil is a global phenomenon,'' U.S. Treasury Undersecretary David McCormick said in a statement. ``We are all affected by it, and strengthened international collaboration is needed now more than ever to find collective solutions to achieve stable and efficient financial markets and restore health to the world economy.''
To contact the reporters on this story: Simon Kennedy in Washington at skennedy4@bloomberg.net Rebecca Christie in Washington at Rchristie4@bloomberg.net.
Last Updated: October 8, 2008 15:42 EDT
http://www.bloomberg.com/apps/news?pid=20601087&sid=aHL.PwvgEiL8&refer=home
By Simon Kennedy and Rebecca Christie
Oct. 8 (Bloomberg) -- Treasury Secretary Henry Paulson said U.S. policy makers are prepared to do more if necessary to stem the worst financial crisis since the Great Depression.
The Treasury, Federal Reserve and Federal Deposit Insurance Corp. will ``use all their authorities to promote the process of repair and recovery and to contain risks to the financial system that might arise from problems at individual institutions,'' Paulson said at a press conference today in Washington.
``It is the policy of the federal government to use all resources at its disposal to make our financial system stronger,'' Paulson said. ``We will use all of the tools we've been given to maximum effectiveness, including strengthening the capitalization of financial institutions of every size.''
Paulson spoke two days before finance ministers and central bankers from the Group of Seven industrial nations gather in Washington for their first meeting since the financial crisis deepened last month.
Beyond the G-7 talks, Paulson said he was seeking a ``special meeting'' of finance officials from the Group of 20, which combines developed and emerging economies.
President George W. Bush signed into law on Oct. 3 a measure that gives Paulson the authority to purchase as much as $700 billion in mortgage-related assets from financial institutions saddled with illiquid debt.
Stock Slump
Since then, the Standard & Poor's 500 Index is down about 8 percent, credit markets have tightened further and, earlier today, central banks around the world collaborated to cut interest rates in an unprecedented move to stem the crisis.
``Patience is also needed because the turmoil will not end quickly and significant challenges remain ahead,'' Paulson said. ``Neither passage of this new law nor the implementation of these initiatives will bring an immediate end to current difficulties.''
The Treasury this week is recruiting asset managers and other staff to carry out the rescue plan, which will be administered by a newly formed Office of Financial Stability in the Treasury's headquarters in Washington.
The global economy is headed for a ``major downturn,'' the International Monetary Fund said in its World Economic Outlook released earlier today.
Global growth is projected at 3 percent next year, down from 3.9 percent this year, the IMF said. In April, the IMF predicted a 25 percent chance of worldwide growth at or below 3 percent, which it said was ``equivalent to a global recession.''
``The turmoil is a global phenomenon,'' U.S. Treasury Undersecretary David McCormick said in a statement. ``We are all affected by it, and strengthened international collaboration is needed now more than ever to find collective solutions to achieve stable and efficient financial markets and restore health to the world economy.''
To contact the reporters on this story: Simon Kennedy in Washington at skennedy4@bloomberg.net Rebecca Christie in Washington at Rchristie4@bloomberg.net.
Last Updated: October 8, 2008 15:42 EDT
http://www.bloomberg.com/apps/news?pid=20601087&sid=aHL.PwvgEiL8&refer=home
