“The actions will take more time to have their full impact,” the president said in a Friday morning address to the U.S. Chamber of Commerce. “It took a while for the credit system to freeze up, it’s going to take a while for the credit system to thaw.”
He spoke as a report on home construction cast more doubt on the nation’s ability to rebound quickly from the financial crisis. The Commerce Department report found new housing starts fell 6.3 percent in September to an annual rate of 817,000 new units, the lowest level since 1991.
In his speech, President Bush did not introduce any new policies but said the ones already drafted are “big enough and bold enough to work.” The United States government will buy up to $250 billion in preferred shares in the country’s banks following similar steps taken by several European governments.
The injection, part of a $700 billion rescue package, is meant to breathe new life into a frozen credit market in which banks remain reluctant to lend money to each other and in turn, to consumers.
He also sought to ease concerns from many conservatives that such drastic government intervention threatened private markets.
“Had the government not acted, the hole in our financial system would have grown larger,” Bush said. “We would have been forced to respond with even more drastic and costly measures later on.”
On Saturday, President Bush will meet with French President Nicolas Sarkozy and European Commission President Jose Manual Barroso at Camp David, Md. to tackle what has turned into a global crisis. The meeting is intended to be the first step of planning for a global summit that would overhaul the Bretton Woods agreement that has formed the architecture of the global financial since 1944.
“We’re determined to overcome this challenge together,” President Bush said.
U.S. stocks slid in reaction to Friday’s housing report: The Dow Jones industrial average fell 120.19 points, or 1.34 percent, to 8,858.59. The Standard & Poor’s 500 Index lost 12.05 points, or 1.27 percent, to 934.38. The Nasdaq Composite Index was down 15.50 points, or 0.90 percent, at 1,702.21.
Two companies, manufacturer Honeywell International Inc. and Google Inc., posted third-quarter earnings profits. Google’s stock was up more than 5 percent, but Honeywell’s was down nearly 10 percent.