Bush, world fiscal leaders meet to promote calm
WASHINGTON — President Bush and the world’s financial leaders staged repeated displays of unity Saturday to combat an unfolding credit crisis, hoping to calm investors whose panic has spread despite bold and accelerating government action.
While no concrete offers of new moves were made Saturday, Bush pledged anew that his administration was doing everything possible to halt the biggest market disruptions since the Great Depression, and the finance ministers spoke in unusually somber terms about the need for action.
Bush, who had started the day shortly after daybreak with a Rose Garden appearance with finance ministers from the world’s richest countries, made an unexpected late-day visit to the headquarters of the 185-nation International Monetary Fund. With Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben S. Bernanke, he participated in an evening discussion with the Group of 20, which includes rich countries and major developing nations such as China, Brazil and India.
Brazilian Finance Minister Guido Mantega said the president stressed the seriousness of the current situation and told the finance ministers that he was doing all he could to involve other countries in efforts to resolve the crisis.
In response, the G-20 countries issued a joint statement in which the finance officials pledged to work together “to overcome the financial turmoil and to deepen cooperation to improve the regulation, supervision and the overall functioning of the world’s financial markets.”
The financial turmoil dominated discussions at the annual meetings of the IMF and World Bank over the weekend. The IMF strongly endorsed a five-point plan put together by the G-7 nations the day before that pledged to use all means possible to prevent major financial institutions from failing and to keep pumping money into the banking system to unfreeze lending and get credit — the lifeblood of the economy — flowing again.
“The depth and systemic nature of the crisis call for exceptional vigilance, coordination and readiness to take bold action,” the IMF said in its joint statement. That statement, in an unusual move, repeated verbatim all of the commitments made in the G-7 statement that had been released Friday.
“There is a resolve that this crisis will be resolved, that no tools will be spared to address this issue,” Egypt’s finance minister, Youssef Boutros Ghali, chairman of the IMF’s policy panel, told a news conference late Saturday.
In his Rose Garden appearance, Bush made a plea for nations to work together to address the crisis, avoiding the go-it- alone protectionist trade strategies that worsened conditions during the Great Depression.
Bush did not mention any specific action that prompted his call. But Ireland recently moved to guarantee all bank deposits, triggering similar actions in Germany and other countries concerned that nervous depositors would move their bank accounts to Ireland.
In his White House remarks, the president barely noted a significant new step from his administration — partial nationalization of some banks. After days of speculation that this move was coming, Paulson announced Friday night that the government would buy part ownership in an array of American banks.
No detail was provided about how the Bush administration’s approach would work, only that it was similar to Britain’s move to pour cash into its troubled banks in exchange for a stake in them. The U. S. government would use an unspecified portion of the $700 billion approved by Congress a week ago to purchase stocks in a wide variety of banks and other financial institutions.
The rescue program originally was sold to Congress and the public as a plan to buy mortgage-related loans from financial institutions. The goal was to remove troubled assets from those institutions’ books and inspire them to restart more normal lending operations.
Congress passed the massive and hard-fought legislation, and Bush signed it. The government raised the amount of bank deposits it insured. Billions of dollars of reserves have gone into banking systems in the United States and other countries. Yet credit, the economy’s lifeblood, has remained virtually frozen.
This paralysis in the credit markets has translated into intense turmoil in the stock markets. The Dow Jones industrial average just completed its worst week in history, plummeting more than 18 percent.
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