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Bush reveals new steps to steady banking industry
(Agencies)
Updated: 2008-10-14 21:17

Bush said that by restoring confidence in the system, the hope is to "return our economy back to the road of growth and prosperity."

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He said that the partial nationalization of the nation's battered financial sector was a short-term move to help banks to be able to begin lending again.

"Government's role will be limited and temporary," the president pledged.

It was the latest in a series of moves by the government in an effort to combat a global credit crisis that is threatening to push the country into a deep recession.

Executives of the country's biggest banks were summoned to a remarkable meeting at the Treasury Department on Monday to be briefed on the plan. Treasury Secretary Henry Paulson basically told the bank CEOs that they had to accept the government stock purchases for the good of the US economy.

The administration plans to spend $250 billion of the $700 billion government rescue program passed by Congress on Oct. 3 to make stock purchases this year. The first purchases will be in nine large banks, officials said.

Paulson was expected to outline details of the plan at a Treasury Department news conference.

"Over the past few weeks, my administration has worked with both parties in Congress to pass a financial rescue plan. Federal agencies have moved decisively to shore up struggling institutions and stabilize our markets," Bush said. "And the United States has worked with partners around the world to coordinate our actions to get our economies back on track."

He called the decision for the government to buy stock in the distressed banks "an essential short-term measure to ensure the viability of America's banking system."