BH&F Blog

Friday, September 19, 2008

U.S. Plans Sweeping Reforms For Markets

Deborah Solomon and Damien Paletta report that the federal government is working on a sweeping series of programs that would represent perhaps the biggest intervention in financial markets since the 1930s, embracing the need for a comprehensive approach to the financial crisis after a series of ad hoc rescues. Treasury Secretary Henry Paulson briefed reporters in Washington about efforts to heal the crisis in the U.S. financial markets. Treasury Secretary Henry Paulson announced plans Friday to quickly set up a "bold" government program to take over troubled mortgage assets from financial institutions, along with other efforts to step up the purchase of mortgage-backed securities. "The federal government must implement a program to remove these illiquid assets that are weighing down our financial institutions and threatening our economy," Mr. Paulson said in prepared remarks for a press conference. (Read the full remarks) President George W. Bush warned that a "significant" amount of taxpayer funds will be put at risk with the government's plan to bolster shaky markets, but said intervention is necessary to keep the financial system from grinding to a halt. "This a pivotal moment for America's economy," Mr. Bush said Friday. "In our nation's history, there have been moments that require us to come together across party lines to address major challenges. This is such a moment." Meanwhile, the Federal Reserve took another step deep into uncharted territory Friday morning, effectively coming to the rescue of another struggling financial sector -- this time the money market mutual fund industry. Separately, the Securities and Exchange Commission proposed a temporary ban on short-selling on 799 financial stocks. The ban, which is effective immediately, is set to last for 10 days, but could be extended for up to 30 days. (See related article.) Mr. Paulson plans to work with Congress over the weekend to get legislation in place next week, he said, calling for "prompt, bipartisan action." The program must be big enough to have "maximum impact," while protecting taxpayers, said Mr. Paulson.

To read the full article, click here.

posted by BHF at 10:11 AM

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Friday, September 19, 2008

U.S. Plans Sweeping Reforms For Markets

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