Bush promises more aid to banks if needed

McClatchy NewspapersNovember 24, 2008 

WASHINGTON — President George W. Bush said Monday that Washington was ready to help other faltering financial institutions as it was helping Citigroup, the banking giant that just got a government guarantee for billions of dollars in risky assets and a $20 billion capital injection.

"We have made these kinds of decisions in the past. Made one last night," the president said after having a cup of coffee with Treasury Secretary Henry Paulson at the Treasury Department, next door to the White House. "And if need be, we're going to make these kinds of decisions to safeguard our financial system in the future."

The rescue, announced Sunday by the Treasury, the Federal Reserve and the Federal Deposit Insurance Corp., includes $20 billion from the $700 billion financial rescue package that became law last month.

It also guarantees $306 billion in shaky assets. The Treasury and the FDIC will provide help in case of "unusually large losses" on up to that amount of loans and securities backed by residential and commercial mortgages.

Officials feared that a Citigroup collapse would ripple through the already-fragile financial system.

Wall Street responded favorably Monday, as the Dow Jones Industrial Average was up about 4 percent in early trading, and Citigroup stock jumped nearly 70 percent.

Bush tried to calm the markets with the morning visit to the Treasury Department. Afterwards, he and Paulson appeared on the Treasury steps.

"We will safeguard the financial system as the first step necessary for economic recovery," the president said. "This is a tough situation, but we will recover from it."

He pledged to work with President-elect Barack Obama, who was to introduce his economic team at a Chicago news conference at noon EST.

Bush said he'd spoken to Obama about the Citigroup decision. "I told the American people, and I told the president-elect when I first met him, that anytime we were to make a big decision during this transition, he will be informed, as will his team," he said.

He also said that Paulson was "working closely" with Obama's transition team.

"It's important for the American people to know there is close cooperation," Bush said.

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McClatchy Newspapers 2008

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