18 September 2008
Central Banks Pump Billions into Short-Term Credit
Bush says measures are necessary to shore up troubled global markets
Washington — The U.S. Federal Reserve, in coordination with other central banks, has taken steps to provide additional funds to support financial markets after bank lending froze to nearly a standstill, threatening the stability of the global economy, President Bush said.
"These actions are necessary, and they're important, and the markets are adjusting to them," Bush said in brief remarks September 18 at the White House.
The president canceled September 18 trips to Alabama and Florida where he had planned to discuss alternative energy strategies and attend two political fundraisers. He has been meeting with economic advisers and holding consultations with Treasury Secretary Henry Paulson, and was expected to hold additional meetings later in the day.
"The health of our financial markets is critical to the nation's economy, and the president remains focused on taking action to stabilize and strengthen our markets and to restore investor confidence," White House spokesman Tony Fratto said.
As bank lending began freezing following the recent shocks to the financial markets, the Federal Reserve authorized making $180 billion available to other central banks to lend to their commercial banks so borrowers would be able to conduct business and shore up financial markets.
The European Central Bank increased its line up to $110 billion, while the Swiss National Bank increased to $27 billion, the Bank of Japan to $60 billion, the Bank of England to $40 billion and the Bank of Canada to $10 billion.
The central banks said, in a joint statement at 3 a.m. EDT (0700 GMT), "These measures, together with other actions taken in the last few days by individual central banks, are designed to improve the liquidity conditions in global financial markets. The central banks continue to work together closely and will take appropriate steps to address the ongoing pressures."
Bush said that in recent weeks the U.S. government has taken extraordinary measures to address the crisis that has confronted global financial markets in the aftermath of the U.S. housing mortgage crisis.
"We've taken control of Fannie Mae and Freddie Mac, the home finance agencies, to help promote market stability and to ensure they can continue to play a role in helping our housing market recover," Bush said. "This week the Federal Reserve acted to prevent the disorderly failure of the insurance giant AIG [American International Group], a development that could have caused a severe disruption in our financial markets and threatened other sectors of the economy."
And Bush said the Securities and Exchange Commission has stepped up its enforcement actions against illegal market manipulation.
