US President George W. Bush quickly signed into law a far-reaching US$700 billion bill to bail out the tottering US financial industry, calling it “essential to helping America’s economy” weather the storm.
The president signed the bill about an hour and a half after the House completed congressional action on it with a 263 to 171 vote, underscoring the sense of urgency surrounding the measure.
“I know some Americans have concerns about this legislation, especially about the government’s role and the bill’s cost,” Bush said in remarks at the White House. “As a strong supporter of free enterprise, I believe government intervention should occur only when necessary. In this situation, action is clearly necessary.”
The measure, which passed the Senate on Wednesday, authorizes the government to buy — and later try to resell — bad mortgages and securities backed by them from banks and other financial institutions around the country.
Bush said the action should allow banks to begin lending again once they get the tainted assets off their books.
“By coming together on this legislation, we have acted boldly to help prevent the crisis on Wall Street from becoming a crisis in communities across our country,” Bush said. “We have shown the world that the United States of America will stabilize our financial markets and maintain a leading role in the global economy.”
“Ultimately, the cost to taxpayers will be far less than the initial outlay,” Bush said.
After his remarks, Bush walked the short distance to the Treasury Department where he was greeted by Treasury Secretary Henry Paulson, who helped steer the complicated legislation through Congress and who will oversee the program for the remainder of Bush’s term.
When the two emerged about 25 minutes later, Bush told Paulson: “You and your team have worked incredibly hard.”
“I know that your people are exhausted in there,” he said.
An earlier version of the rescue plan was rejected in the House on Monday, sending stock markets plunging around the world and raising fears that the US was headed for the worst economic crisis since the 1930s.
But the bill was sweetened with tax cuts and an increase in the government insurance on deposits and savings accounts, to US$250,000, as leaders of both parties stepped up their efforts to corral support.
“A major problem in our financial system is that banks have restricted the flow of credit to businesses and consumers. Many of the assets these banks are holding have lost value,” Bush said.
He said the legislation that is now law “addresses this problem head-on by providing a variety of new tools to the government, such as allowing us to purchase some of the troubled assets and creating a new government insurance program that will guarantee the value of others.”
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