[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.