Bush: More Decisions Like Citigroup Possible

WASHINGTON — President Bush argued Monday that the government's dramatic rescue of Citigroup was necessary to "safeguard the financial system" and help the economy recover, and he said there could be more such moves if other institutions need help.

Bush said he approved the action, recommended by Treasury Secretary Henry Paulson, while flying back to Washington on Sunday evening from meetings in Peru with Pacific Rim leaders. He spoke with President-elect Barack Obama on Monday morning about the move, part of what he has promised will be "close cooperation" between his administration and the Obama camp until the transfer of power on Jan. 20.

Referring to the Citigroup rescue, Bush said: "We have made these kind of decisions in the past. We made one last night. And if need be we will make these kind of decisions to safeguard our financial system in the future."

Briefing reporters later, White House deputy press secretary Tony Fratto would not identify any other firms or institutions that might be next in line for government assistance. "We would never foreshadow any specific actions involving private firms, but I think it's safe to say ... that we take threats to our financial system seriously and we stand ready to take any steps necessary to prevent systemic events in our economy," Fratto said.

He also said that the Treasury Department could rethink its decision last week to leave the final $350 billion of the $700 billion in bailout money approved by Congress for the Obama administration. Fratto said Treasury officials "wouldn't hesitate to go to Congress" for that money if it feels it is needed now.

Bush, who spoke after meeting with Paulson and other Cabinet members at the Treasury Department, said they all realize that Americans are concerned for their jobs and savings.

"We will safeguard the financial system as the first step necessary for economic recovery," the president said. "This is a tough situation. But we will recover from it."

Also while at Treasury, just across a sidewalk from the White House, Bush joined a meeting of top administration officials who are working on greater economic cooperation with China. Bush met on Friday in Peru with Chinese President Hu Jintao for talks focused in part on the global economic turmoil.

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The flurry of activity by Bush, which had not been announced in advance, came the morning after the government's agreement to shoulder hundreds of billions of dollars in possible losses at Citigroup and to plow a fresh $20 billion into the troubled company. Bush called the company by its predecessor's name, Citicorp.

The president has repeatedly sought to defend his administration's unprecedented intervention in the financial markets in recent months, arguing against criticism from some fiscal conservatives by saying that the moves go against his free-market instincts but are necessary because of the dire times. He also has said that he was warned that the economy could fall into a slowdown worse than the Great Depression of the 1930s if the government did not act.

Analysts said a Citigroup failure would have seized up still-fragile lending markets and caused untold losses among institutions holding debt and financial products backed by the company.

Fratto said companies like Citigroup are so "systemically large" that they could "bring down not just the entire U.S. financial system but the global financial system."

"What these efforts are doing are to prevent the financial system from failing," he said. "It's never been about any one particular company. We let thousands of companies fail in this economy every year."

The bold move regarding Citigroup is the latest in a string of high-profile government bailout efforts. The Fed in March provided financial backing to JPMorgan Chase's buyout of ailing Bear Stearns. Six months later, the government was forced to take over mortgage giants Fannie Mae and Freddie Mac and throw a financial lifeline, which was recently expanded, to insurer American International Group.

At the meetings in Lima, Peru, over the weekend, Bush succeeded in getting the nations there to endorse the action plan drafted a week earlier at an international summit Bush hosted in Washington.

That means that both the so-called Group of 20 nations and the Pacific Rim countries are now on record behind overhauling financial regulation and avoiding the temptation to erect new trade barriers during the current downturn.

Comments

[billw8017]

We probably shouldn't try to inflate our way out of debt without talking to China and Japan.

Don't kid yourself about the country going into deflation. The price of fuel is down, but the price of food is up. These "volatiles" don't counter balance. The price of fuel won't stay down We are into the oscillation that follows the bursting of a bubble, but there is a substantial upward trend for fuel, too. This is due to the weakness of the dollar.

I think President-elect Obama is going somewhat wrong with Summers and Rubinomics, but I expect him to be pragmatic. You know, the wrong road doesn't stop you from getting where you want to go, it just amounts to going a little further to get there. The economists I respect are Krugman, Stiglitz and Schiff; none of whom are on the Obama team. Summers hates Stiglitz and got him fired from the World Bank. I hope Summers discredits himself as the present crisis plays out and never gets to the Chairmanship of the Fed.

[CHIPKEEPER]

HOW MUCH DO YOU THINK CITI, AIG, BANK OF AMERICA WILL PAY BUSH PER SPEECH AFTER JAN. 21, 2009?

[curocat]

Bush's "Permanent Tax Cut", paid up front. Wasn't his family into banking ????

[WritingFrontier]

This most recent bailout is going to backlash. Here's why:

http://saturdaymorningpost.com/2008/11/24/dirty-jobs/#more-797

[mydogshakespeare]

Hey Bush: Expect more RIDICULE!

[marbou]

What a blunder Nancy Pelosi made when she refused to carry on the impeachment of George W. This guy is a one man wrecking crew and he will reap destruction until his last day in power. He may even find a way to continue his diabolical deeds even after January 20th.

[curocat]

I agree, she tried playing the good grandmother and it back fired. Even if she didn't attempted to Impeach it would have been a good hedge..

[FreedomAgain]

Criminals. They don't want any of it going to help the average citizens of the nation, only Bush's and Paulson's criminal super-wealthy buddies. We're making it advantageous for Banks and Industry to pretend to be bad off so that they can get more bailout money. We need to export Bush.

[LITU]

It would be illegal for me to express my sentiments regarding the son of Barbara Bush. Needless to say, I do not wish him well.

[markinaz]

That title should have read "Prepare for more thievery".

[bonofide]

The $h!t just doesn`t stop hitting the fan does it?

[Chardin]

PS, did anyone mention how citi-mortgage "confiscates" homeowner insurance payments and doles them out in 3 parts to the home owner, sends out teams of inspectors 3 separate times to make sure work is done when they feel like it, to "their standards" leaving the home owner holding the bag with contractors who want payment while, citi collects interest on people"s money. When you calculate amounts such as are being paid by insurers re: Katrina, Texas and or just a Uncle Bill"s paint job, well, we"re talking about billions -collecting interest FOR THEM.

[Chardin]

Bailout of citi = great waves of nausea.
Remember Nader suggesting a $1 surcharge on each transaction on Wall Street?That was Blasphemy! in sacrosanct chambers of congressional control center where no silver pistols shot any one's own feet as Paulson did his dance of the 7 veils. Full scrutiny of Congress" indiv-portfolios pre-vote on Bail Out !
for COL-cryingoutloud.

This pepetration is a rumbling of the avalanche to come. Banks and Detroit sit at the craps table loading dice in begging cups while Washington- "complicit wide mouth bass", 'fixes' their cherries on our tax returns. Didn't we learn anything from the pre election fuel manipulation and fear mongering of 9-11? No, we didn"t. It"s the same "Dad knows best' chatter PRE pre-emptive strike/ AIG and fuel hikes, I sink into depression seeing the tsunami with the 'too little too late' obeisant citizen frowning and journalist / perpetrators as their main propaganda machine and delivery system with "Dad knows best' Adult Children of Big Fat Liars spin. Of course there were plenty of journalists that said "hell no!" also and those protestors who dialed Washington to no avail.

Terribly daunting with so little return on our investment of "taxes"except in a 'Truth in Lending Bank and Trust" where someone like Nader invested his life savings. Life blood, that is. New plan for citi includes "review" of executives-and 'some' restrictions"? Laughable.

[callonball8]

With this latest round of bail-outs, when will people get it. This is all being done to launder as much of the 700 billion, as possible. Don't believe? Then look up the term, money laundering. And, there is still the 80 billion lost in Iraq. (My feeling is Wolfawitz was to have been the bag-man, at the World Bank, for that one).

[old lady]

Oh-oh I smell another GOPer going roque? Next bail out will be for Texas dirt farmers for sure.Can't somebody stop this guy from trying to act like a grownup and send him to his room =

[harriscrl3]

Does Bush remember that 1.2 million people have lost their jobs this year. How the hell does he plan on creating jobs. Is this the basis of his economic plan: Banks in trouble write checks and stick it to taxpayers. Is this it seriously doe he expect this will bring growth will help mainstreet will get jobs to the 1.2 million umemployed. Who the HELL is Bush's economic advisor where hte hell did he get his degree out of a cracker jack box. How can you focus on one sector and ignore eveyrthing else and think that is going to get the economy growing again.

UGG I can't wait for him to GONE GONE from the White House. He is an embarfassment and an abject FAILURE

Carol