Released: October 14, 2008

$250 billion bank investment plan

Source: Howard Schneider, Neil Irwin & David Cho, Washington Post (Free Registration)

President George Bush said this morning that the administration’s “unprecedented and aggressive” plan to partly nationalize nine major banks was an “essential short term measure to ensure the viability “ of a battered financial system.

With the government poised to invest $250 billion of taxpayer’s money into private banks, Bush said that the plan was not an abandonment of the free market, but a necessary move to avoid a deep economic crash. “The government’s role will be limited and temporary,” Bush said in morning remarks at the White House. “These measures are not intended to take over the free market, but to preserve it.”

Top economic policymakers, including Treasury Secretary Henry M. Paulson Jr., are set to unveil further details of the plan in briefings this morning. But the broad outlines were released on Monday. The U.S. followed similar steps announced through the day in Europe in what amounted to a coordinated move by the world’s major economies to back the global banking system with public funds and confidence-building measures, such as government guarantees of loans between banks. 

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