[Weekly Compilation of Presidential Documents Volume 44, Number 40 (Monday, October 13, 2008)]
[Pages 1325-1327]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks on the National Economy

October 10, 2008

    Good morning. Over the past few days, we have witnessed a startling 
drop in the stock market, much of it driven by uncertainty and fear. 
This has been a deeply unsettling period for the American people. Many 
of our citizens have serious concerns about their retirement accounts, 
their investments, and their economic well-being.
    Here's what the American people need to know: That the United States 
Government is acting; we will continue to act to resolve

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this crisis and restore stability to our markets. We are a prosperous 
nation with immense resources and a wide range of tools at our disposal. 
We're using these tools aggressively.
    The fundamental problem is this: As the housing market has declined, 
banks holding assets related to home mortgages have suffered serious 
losses. As a result of these losses, many banks lack the capital or the 
confidence in each other to make new loans. In turn, our system of 
credit has frozen, which is keeping American businesses from financing 
their daily transactions and creating uncertainty throughout our 
economy.
    This uncertainty has led to anxiety among our people, and that is 
understandable. That anxiety can feed anxiety, and that can make it hard 
to see all that is being done to solve the problem. The Federal 
Government has a comprehensive strategy and the tools necessary to 
address the challenges in our economy. Fellow citizens, we can solve 
this crisis, and we will.
    Here are the problems we face and the steps we are taking.
    First, key markets are not functioning because there's a lack of 
liquidity, the grease necessary to keep the gears of our financial 
system turning. So the Federal Reserve has injected hundreds of billions 
of dollars into the system. The Fed has joined with central banks around 
the world to coordinate a cut in interest rates. This rate cut will 
allow banks to borrow money more affordably, and it should help free up 
additional credit necessary to create jobs and finance college 
educations and help American families meet their daily needs. The Fed 
has also announced a new program to provide support for the commercial 
paper market, which is freezing up. As the new program kicks in over the 
next week or so, it will help revive a key source of short-term 
financing for American businesses and financial institutions.
    Second, some Americans are concerned about whether their money is 
safe. So the Federal Deposit Insurance Corporation and the National 
Credit Union Administration have significantly expanded the amount of 
money insured in savings accounts and checking accounts and certificates 
of deposit. That means that if you have up to $250,000 in one of these 
insured accounts, every penny of that money is safe. The Treasury 
Department has also acted to restore confidence in a key element of 
America's financial system by offering government insurance for money 
market mutual funds.
    Thirdly, we are concerned that some investors could take advantage 
of the crisis to illegally manipulate the stock market. So the 
Securities and Exchange Commission has launched rigorous enforcement 
actions to detect fraud and manipulation in the market. The SEC is 
focused on preventing abusive practices, such as putting out false 
information to drive down particular stocks for personal gain. Anyone 
caught engaging in illegal financial activities will be prosecuted.
    Fourth, the decline in the housing market has left many Americans 
struggling to meet their mortgages--and are concerned about losing their 
homes. My administration has launched two initiatives to help 
responsible borrowers keep their homes. One is called HOPE NOW, and it 
brings together homeowners and lenders and mortgage servicers and others 
to find ways to prevent foreclosure. The other initiative is aimed at 
making it easier for responsible homeowners to refinance into affordable 
mortgages insured by the Federal Housing Administration. So far, these 
programs have helped more than 2 million Americans stay in their home. 
And the point is this: If you are struggling to meet your mortgage, 
there are ways that you can get help.
    With these actions to help to prevent foreclosures, we're addressing 
a key problem in the housing market: The supply of homes now exceeds 
demand. And as a result, home values have declined. Once supply and 
demand balance out, our housing market will be able to recover, and that 
will help our broader economy begin to grow.
    Fifth, we've seen that problems in the financial system are not 
isolated to the United States. They're also affecting other nations 
around the globe. So we're working closely with partners around the 
world to ensure that our actions are coordinated and effective. Tomorrow 
I'll meet with the finance ministers from our partners in the G-7 and 
the heads of the International Monetary Fund and World Bank. Secretary 
Paulson will also meet

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with finance ministers from the world's 20 leading economies. Through 
these efforts, the world is sending an unmistakable signal: We're in 
this together, and we'll come through this together.
    And finally, American businesses and consumers are struggling to 
obtain credit, because banks do not have sufficient capital to make 
loans. So my administration worked with Congress to quickly pass a $700 
billion financial rescue package. This new law authorizes the Treasury 
Department to use a variety of measures to help bank rebuild capital, 
including buying or insuring troubled assets and purchasing equity of 
financial institutions. The Department will implement measures that have 
maximum impact as quickly as possible. Seven hundred billion dollars is 
a significant amount of money. And as we act, we will do so in a way 
that is effective.
    The plan we are executing is aggressive. It is the right plan. It 
will take time to have its full impact. It is flexible enough to adapt 
as the situation changes, and it is big enough to work.
    The Federal Government will continue to take the actions necessary 
to restore stability to our financial markets and growth to our economy. 
We have an outstanding economic team carrying out this effort, led by 
Secretary of the Treasury Hank Paulson, Federal Reserve Chairman Ben 
Bernanke, SEC Chairman Chris Cox, and FDIC Chair Sheila Bair. I thank 
them and their dedicated teams for their service during this important 
moment in our country's history.
    This is an anxious time, but the American people can be confident in 
our economic future. We know what the problems are, we have the tools to 
fix them, and we're working swiftly to do so. Our economy is innovative, 
industrious, and resilient because the American people who make up our 
economy are innovative, industrious, and resilient. We all share a 
determination to solve this problem, and that is exactly what we're 
going to do. May God bless you.

Note: The President spoke at 10:25 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.