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Bush says it will take time to unfreeze credit

(Agencies)
Updated: 2008-10-17 22:31

WASHINGTON – President Bush on Friday defended the government's extraordinary series of interventions in the financial crisis, saying these "last resort" measures will stabilize the economy, but cautioning they will take time to work.

President Bush speaks about the economy at the US Chamber of Commerce in Washington, Friday, Oct. 17, 2008. [Agencies]

"I would oppose such measures under ordinary circumstances," Bush said in a speech timed to wrap up just before Friday's stock market opening. "But these are not ordinary circumstances."

He said the government moves were aimed at preventing the problems from growing worse, not as an immediate salve to the battered economy.

"It took a while for the credit markets to freeze up, and it's going to take a while for the credit system to thaw," Bush said in 20 minutes of remarks delivered across the street from the White House at the US Chamber of Commerce building, a symbolic headquarters of American business.

Seeking to calm markets that have gyrated wildly - and mostly downward - despite massive infusions of government cash into the system, Bush said the steps are "big enough and bold enough to work."

"The American people can be confident that they will," the president said.

The main thrust of his speech, however, seemed aimed at conservatives and members of the public that are wary of so much government intervention into private markets. He presented himself as a free-market devotee dragged into these moves, which he defended as limited in size, scope and duration. He said there will be strong oversight and perhaps even taxpayer benefit over the long term.

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"Had the government not acted, the hole in our financial system would have grown larger," Bush said. "We would have been forced to respond with even more drastic and costly measures later on."

Among the major steps taken in the last month is a Treasury Department announcement that it would inject up to $250 billion in US banks in return for partial ownership stakes. The Federal Deposit Insurance Corp. also has promised to temporarily guarantee new issues of bank debt and to provide unlimited deposit insurance for non-interest bearing accounts, mainly used by small businesses. And the Federal Reserve combined with the world's other major central banks to slice interest rates.

Bush called it "an extraordinary response to an extraordinary crisis."

Speaking of the coordination between Europeans and the United States, Bush said "We're determined to overcome this challenge together."

That cooperation continues this weekend, when French President Nicolas Sarkozy and European Commission President Jose Manual Barroso meet Bush at Camp David, Md. Their Saturday sessions are intended to lay the groundwork for a global summit to overhaul the financial system.