    [Public Papers of the Presidents of the United States: George W. Bush (2008, Book II)]
    [September 19, 2008]
    [Pages 1212-1214]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks on the National Economy
    September 19, 2008

        Good morning. I thank the Treasury Secretary, Hank Paulson, Federal Reserve Chairman Ben
    Bernanke, and SEC Chairman Chris Cox for joining me today.
        This is a pivotal moment for America's economy. Problems that
    originated in the credit markets--and first showed up in the area of
    subprime mortgages--have spread throughout our financial system. This
    has led to an erosion of confidence that has frozen many financial
    transactions, including loans to consumers and to businesses seeking to
    expand and create jobs. As a result, we must act now to protect our
    Nation's economic health from serious risk.
        There will be ample opportunity to debate the origins of this
    problem. Now is the time to solve it. In our Nation's history, there
    have been moments that require us to come together across party lines to
    address major challenges. This is such a moment. Last night Secretary
    Paulson and Chairman
    Bernanke and Chairman Cox met with congressional leaders of both parties,
    and they had a very good meeting. I appreciate the willingness of
    congressional leaders to confront this situation head on.
        Our system of free enterprise rests on the conviction that the
    Federal Government should interfere in the marketplace only when
    necessary. Given the precarious state of today's financial markets and
    their vital importance to the daily lives of the American people,
    Government intervention is not only warranted, it is essential.
        In recent weeks, the Federal Government has taken a series of
    measures to help promote stability in the overall economy. To avoid
    severe disruptions in the financial markets and to support home
    financing, we took action to address the situation at Fannie Mae and
    Freddie Mac. The Federal Reserve also acted to prevent the

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    disorderly liquidation of the insurance company AIG. And in coordination
    with central banks around the world, the Fed has injected much needed
    liquidity into our financial system.
        These were targeted measures designed primarily to stop the problems
    of individual firms from spreading even more broadly. But more action is
    needed. We must address the root cause behind much of the instability in
    our markets: mortgage assets that have lost value during the housing
    decline and are now restricting the flow of credit. America's economy is
    facing unprecedented challenges, and we are responding with
    unprecedented action.
        Secretary Paulson, Chairman
    Bernanke, and Chairman Cox have briefed leaders on Capitol Hill on the
    urgent need for Congress to pass legislation approving the Federal
    Government's purchase of illiquid assets, such as troubled mortgages
    from banks and other financial institutions. This is a decisive step
    that will address underlying problems in our financial system. It will
    help take pressure off the balance sheets of banks and other financial
    institutions. It will allow them to resume lending and get our financial
    system moving again.
        Additionally, the Federal Government is taking several other steps
    to address the trouble of our financial markets.
        The Department of the Treasury is acting to restore confidence in a
    key element of America's financial system: money market mutual funds. In
    the past, Government insurance was not available for these funds, and
    the recent stresses on the markets have caused some to question whether
    these investments are safe and accessible. The Treasury Department's
    actions address that concern by offering Government insurance for money
    market mutual funds. For every dollar invested in an insured fund, you
    will be able to take a dollar out.
        The Federal Reserve is also taking steps to provide additional
    liquidity to money market mutual funds, which will help ease pressure on
    our financial markets. These measures will act as grease for the gears
    of our financial system, which were at risk of grinding to a halt. They
    will support the flow of credit to households and businesses.
        The Securities and Exchange Commission has issued new rules
    temporarily suspending the practice of short-selling on the stocks of
    financial institutions. This is intended to prevent investors from
    intentionally driving down particular stocks for their own personal
    gain. The SEC is also requiring certain investors to disclose their
    short-selling and has launched rigorous enforcement actions to detect
    fraud and manipulation in the market. Anyone engaging in illegal
    financial transactions will be caught and persecuted [prosecuted].*
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        *White House correction.
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        Finally, when we get past the immediate challenges, my
    administration looks forward to working with Congress on measures to
    bring greater long-term transparency and reliability to the financial
    system, including those in the regulatory blueprint submitted by
    Secretary Paulson earlier this year.
    Many of the regulations governing the functioning of America's markets
    were written in a different era. It is vital that we update them to meet
    the realities of today's global financial system.
        The actions I've just outlined reflect the considered judgment of
    Secretary Paulson, Chairman
    Bernanke, and Chairman Cox. We believe that this decisive Government action
    is needed to preserve America's financial system and sustain America's
    overall economy. These measures will require us to put a significant
    amount of taxpayer dollars on the line. This action does entail risk,
    but we expect that this money will eventually be paid back. The vast
    majority of assets the Government is planning to purchase have good
    value over time, because the vast majority of homeowners continue to pay
    their mortgages. And the risk is--of not acting would be far higher.
    Further stress on our financial markets would

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    cause massive job losses, devastate retirement accounts, and further
    erode housing values, as well as dry up loans for new homes and cars and
    college tuitions. These are risks that America cannot afford to take.
        In this difficult time, I know many Americans are wondering about
    the security of their finances. Every American should know that the
    Federal Government continues to enforce laws and regulations protecting
    your money. Through the FDIC, every savings account, checking account,
    and certificate of deposit is insured by the Federal Government for up
    to $100,000. The FDIC has been in existence for 75 years, and no one has
    ever lost a penny on an insured deposit, and this will not change.
        America's financial system is intricate and complex. But behind all
    the technical terminology and statistics is a critical human factor:
    confidence. Confidence in our financial system and in its institutions
    is essential to the smooth operation of our economy, and recently that
    confidence has been shaken. Investors should know that the United States
    Government is taking action to restore confidence in America's financial
    markets so they can thrive again.
        In the long run, Americans have good reason to be confident in our
    economic strength. America has the most talented, productive, and
    entrepreneurial workers in the world. This country is the best place in
    the world to invest and do business. Consumers around the world continue
    to seek out American products, as evidenced by record-high exports. We
    have a flexible and resilient system that absorbs challenges and makes
    corrections and bounces back.
        We've seen that resilience over the past 8 years. Since 2001, our
    economy has faced a recession, the bursting of the dot-com bubble, major
    corporate scandals, an unprecedented attack on our homeland, a global
    war on terror, a series of devastating natural disasters. Our economy
    has weathered every one of these challenges and still managed to grow.
        We will weather this challenge too, and we must do so together. This
    is no time for partisanship. We must join to move urgently needed
    legislation as quickly as possible, without adding controversial
    provisions that could delay action. I will work with Democrats and
    Republicans alike to steer our economy through these difficult times and
    get back to the path of long-term growth. Thank you very much.

    Note: The President spoke at 10:45 a.m. in the Rose Garden at the White
    House. The Office of the Press Secretary also released a Spanish
    language transcript of these remarks.