[Weekly Compilation of Presidential Documents Volume 44, Number 41 (Monday, October 20, 2008)]
[Pages 1342-1344]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks on the National Ecomony

October 14, 2008

    Good morning. I just completed a meeting with my Working Group on 
Financial Markets. We discussed the unprecedented and aggressive steps 
the Federal Government is taking to address the financial crisis. Over 
the past few weeks, my administration has worked with both parties in 
Congress to pass a financial rescue plan. Federal agencies have moved 
decisively to shore up struggling institutions and stabilize our 
markets, and the United States has worked with partners

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around the world to coordinate our actions to get our economies back on 
track.
    This weekend, I met with finance ministers from the G-7 and the G-
20, organizations representing some of the world's largest and fastest 
growing economies. We agreed on a coordinated plan for action to provide 
new liquidity, strengthen financial institutions, protect our citizens' 
savings, and ensure fairness and integrity in the markets. Yesterday 
leaders in Europe moved forward with this plan. They announced 
significant steps to inject capital into their financial systems by 
purchasing equities in major banks, and they announced a new effort to 
jump-start lending by providing temporary government guarantees for bank 
loans. These are wise and timely actions, and they have the full support 
of the United States.
    Today I am announcing new measures America is taking to implement 
the G-7 action plan and strengthen banks across our country.
    First, the Federal Government will use a portion of the $700 billion 
financial rescue plan to inject capital into banks by purchasing equity 
shares. This new capital will help healthy banks continue making loans 
to businesses and consumers, and this new capital will help struggling 
banks fill the hole created by losses during the financial crisis, so 
they can resume lending and help spur job creation and economic growth. 
This is an essential short-term measure to ensure the viability of 
America's banking system. And the program is carefully designed to 
encourage banks to buy these shares back from the Government when the 
markets stabilize and they can raise capital from private investors.
    Second, and effective immediately, the FDIC will temporarily 
guarantee most new debt issued by insured banks. This will address one 
of the central problems plaguing our financial system. Banks have been 
unable to borrow money, and that has restricted their ability to lend to 
consumers and businesses. When money flows more freely between banks, it 
will make it easier for Americans to borrow for cars and homes and for 
small businesses to expand.
    Third, the FDIC will immediately and temporarily expand Government 
insurance to cover all non-interest-bearing transaction accounts. These 
accounts are used primarily by small businesses to cover day-to-day 
operations. By insuring every dollar in these accounts, we will give 
small-business owners peace of mind and bring stability to the--and 
bring greater stability to the banking system.
    Fourth, the Federal Reserve will soon finalize work on a new program 
to serve as a buyer of last resort for commercial paper. This is a key 
source of short-term financing for American businesses and financial 
institutions. And by unfreezing the market for commercial paper, the 
Federal Reserve will help American businesses meet payroll and purchase 
inventory and invest to create jobs.
    In a few moments, Secretary Paulson and other members of my Working 
Group on Financial Markets will explain these steps in greater detail. 
They will make clear that each of these new programs contains safeguards 
to protect the taxpayers. They will make clear that the Government's 
role will be limited and temporary, and they will make clear that these 
measures are not intended to take over the free market, but to preserve 
it.
    The measures I have announced today are the latest steps in this 
systematic approach to address the crisis. I know Americans are deeply 
concerned about the stress in our financial markets and the impact it is 
having on their retirement accounts and 401(k)s and college savings and 
other investments. I recognize that the action leaders are taking here 
in Washington and in European capitals can seem distant from those 
concerns. But these efforts are designed to directly benefit the 
American people by stabilizing our overall financial system and helping 
our economy recover.
    It will take time for our efforts to have their full impact, but the 
American people can have confidence about our long-term economic future. 
We have a strategy that is broad, that is flexible, and that is aimed at 
the root cause of our problem. Nations around the world are working 
together to overcome this challenge. And with confidence and 
determination, we will return our economies to the path of growth and 
prosperity.
    Thank you.

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Note: The President spoke at 8:02 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.