Bush reveals new steps to steady banking industry

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(Agencies)
Updated: 2008-10-14 21:17

WASHINGTON - US President Bush on Tuesday announced a $250 billion plan by the government to directly buy shares in the nation's leading banks, saying the drastic steps were "not intended to take over the free market but to preserve it."

US President George W. Bush makes a statement on the economy in the Rose Garden of the White House, following a meeting of his working group on financial markets in Washington October 14, 2008. [Agencies]

Bush, in the latest of a series of statements on the troubled economy, said in a brief Rose Garden statement that the move echoed similar bold moves made overseas in an effort to prevent a global recession.

"These efforts are designed to directly benefit the American people by stabilizing the financial system and helping the economy recover," he said.

The president made his statement after an early morning meeting with his economic advisers, announcing these steps:

The federal government will use part of the $700 billion bailout law to inject money into banks "by purchasing equity shares."

Bush said this will help banks continue to make loans to businesses and individuals.

The Federal Deposit Insurance Corporation will "temporarily guarantee" most new debt issued by insured banks.

The FDIC also will expand government insurance to cover all non-interest bearing accounts, aiding small businesses in covering their day to day operations.

The Federal Reserve will "soon finalize work" on a new program to serve as a buyer of last resort for commercial paper.

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