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Bush: Federal intervention in banks is `temporary'
ADA, Mich. — President Bush said Wednesday he's against government taking part ownership in private businesses, but that it's necessary this time _ for a while. "In the long run it's not good for the country," he said.
Speaking in this traditional election battleground state, Bush said he agreed with critics who don't want the government owning private enterprises. But he said the administration's bank rescue plan was needed to help the nation through the economic crisis.
"We moved with a plan big enough to make a difference _ a plan with features in it that will cause investments to be temporary, because I frankly don't want the government being involved with businesses, owning businesses," he said. "It's not _ I don't think it's good for the country."
On Tuesday, his administration announced a $250 billion cash infusion into selected banks to help stabilize the system and nudge banks into lending again.
"It was necessary that the stock be purchased to help us through this financial crisis," but not for the long term, Bush said. "And so the plan is structured to get government in a position where these investments will be returned to the taxpayers. And it's likely, by the way, that we'll not only get most of the money back, but in some cases actually make a little money."
The government's bank shares will carry a 5 percent annual dividend that will increase to 9 percent after five years. That increase in the rate is aimed at providing an incentive for companies to buy out the government's stock. The advantage to the taxpayer is that if the rescue plan works, then the shares can be sold for more than the government initially paid, providing a profit on the transaction.
"I bring a sense of optimism and realism," the president said. "I'm realistic about how tough the situation is. I'm optimistic that we're going to come through it. And I believe that when we come through it, we're going to be better than ever."
Bush's remarks, however, come on a day when the government reported that retail sales dropped in September by the biggest margin in three years. Wall Street worried that a recession was imminent or already under way. The market for lending between banks showed improvement, but remained tight. And the Federal Reserve said economic activity has weakened across all of its 12 regional districts.
The president spoke in Ada, a suburb of Grand Rapids, after having lunch with business owners at "Schnitz Ada Grill," a second-floor delicatessen above a bike shop. "It's good to be out of Washington, out here where people are taking risks and working hard and their values are strong," he said.
After lunch, Bush attended a private fundraiser that turned up $500,000 for the Congressional Trust, a joint effort of the Republican National Committee and the National Republican Congressional Committee. The event was held at the home of Dick DeVos, a Republican and former Amway Corp. chief who unsuccessfully ran for governor in 2006.
Michigan is the kind of Rust Belt manufacturing state that had been expected to be a key battleground in this year's election, with McCain making a play to pull the traditionally Democratic state into his column. But polls in Michigan have started showing his Democratic rival Barack Obama with a formidable lead and McCain pulled out his staff and advertising.
Before leaving Washington, Bush met with his Cabinet and told reporters that the government would be a "passive investor" in shoring up banks. "It's very important for the American people to know that the program is designed to preserve free enterprise, not replace it," Bush said.
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BEN FELLER | October 15, 2008 03:55 PM EST |
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