    [Public Papers of the Presidents of the United States: George W. Bush (2008, Book II)]
    [October 18, 2008]
    [Pages 1321-1322]
    [From the U.S. Government Publishing Office www.gpo.gov]

    The President's Radio Address
    October 18, 2008

        Good morning. Our Nation is dealing with a serious financial crisis.
    Over the past month, Americans have witnessed fast-moving events
    involving complicated financial issues. I know many of you are concerned
    about your finances. So this morning, I want to tell you how we're
    addressing the uncertainty in our economy.
        The Federal Government has responded to this crisis with systematic
    and aggressive measures to protect the financial security of the
    American people. These actions will take more time to have their full
    impact, but they are big enough and bold enough to work.
        The primary focus of our efforts is addressing the underlying
    problem behind the freeze in our credit markets. Earlier this month,
    Congress passed bipartisan legislation authorizing the Treasury
    Department to use up to $700 billion to help banks rebuild capital. This
    week, I announced that the Treasury will use a portion of that money to
    inject capital directly into banks by purchasing equity shares. This new
    capital will help banks continue making loans to businesses and
    consumers. In addition, the Treasury will use part of the $700 billion
    to purchase some of the troubled assets that are weighing down banks'
    balance sheets and clogging the financial system. This extraordinary
    effort is designed with one overriding purpose: to help banks get loans
    flowing to American consumers and businesses, so they can create jobs
    and grow our economy.
        I know many Americans have reservations about the Government's
    approach, especially about allowing the Government to hold shares in
    private banks. As a strong believer in free markets, I would oppose such
    measures under ordinary circumstances. But these are no ordinary
    circumstances. Had the Government not acted, the hole in our financial
    system would have grown larger, families and businesses would have had
    an even tougher time getting loans, and ultimately, the Government would
    have been forced to respond with even more drastic and costly measures
    later on. So I decided that Government had to move, but that
    Government's involvement in individual banks had to have prudent limits.
        The Government's involvement is limited in size. The Government will
    only buy a small percentage of shares in banks that choose to
    participate so that private investors retain majority ownership.
        The Government's involvement is limited in scope. The Government
    will not exercise control over any private firm, and Federal officials
    will not have a seat around your local bank's boardroom table. The
    shares owned by the Government will have voting rights that can be used
    only to protect the taxpayers' investment, not to direct the firm's
    operations.
        The Government's involvement is limited in duration. It includes
    provisions to encourage banks to buy their shares back from the
    Government when the markets stabilize and they can raise money from

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    private investors. This will ensure that banks have an incentive to find
    private capital to replace the taxpayers' investment and to do so
    quickly.
        I know many of you are also concerned about the price tag of this
    rescue package. Ultimately, we believe the final cost will be
    significantly less than the initial investment. Many of the troubled
    assets that the Government buys will increase in value as the market
    recovers. That means the Government eventually will be able to resell
    them for a higher price. In addition, the Government will receive
    quarterly dividends from the equity shares it purchases in financial
    institutions. If banks do not repurchase these shares within 5 years,
    the dividends they owe the Government will increase substantially. This
    provides a clear incentive for banks to buy back their shares, thus
    returning the money to taxpayers as soon as possible.
        In the long run, the American people can have confidence that our
    economy will bounce back. America is the best place in the world to
    start and run a business, the most attractive destination for investors
    around the globe, and home to the most talented, enterprising, and
    creative workers in the world. We're a country where all people have the
    freedom to realize their potential and chase their dreams. This promise
    has defined our Nation since its founding, this promise will guide us
    through the challenges we face today, and this promise will continue to
    define our Nation for generations to come.
        Thank you for listening.

    Note: The address was recorded at 7:45 a.m. on October 17 in the Cabinet
    Room at the White House for broadcast at 10:06 a.m. on October 18. The
    transcript was made available by the Office of the Press Secretary on
    October 17, but was embargoed for release until the broadcast. The
    Office of the Press Secretary also released a Spanish language
    transcript of this address.