U.S. ready to maintain financial stability: Paulson
U.S. Treasury Secretary Henry Paulson on Sunday tried to allay election-year fears about the economy amid growing market turmoil, saying the government was prepared to do what it takes to maintain stability in the financial system.
Paulson appeared on several Sunday television talk shows to express confidence in the U.S. economy and financial firms after the Federal Reserve moved on Friday to inject capital into Bear Stearns (BSC.N: Quote, Profile, Research), the fifth-largest U.S. investment bank, which ran short of cash to repay its lenders.
Paulson told “Fox News Sunday” the Fed made the right decision to come to the rescue of the investment firm and that maintaining stability in financial markets was a top priority of the government.
“The government is prepared to do what it takes to maintain the stability of our financial system,” Paulson said. “That’s our priority.”
Paulson said officials were continuing discussions about the financial market turmoil through the weekend cash advance flexible payments. President George W. Bush plans to meet with his top economic advisers on Monday. Many analysts believe the Fed will decide to sharply cut interest rates at its policy meeting next week.
The housing crisis, a broadening credit crunch, a weaker dollar and the softening labor market have put the economy ahead of the war in Iraq as the top concern of voters heading into the November presidential elections.
Continued market turmoil and a protracted economic downturn could bode ill for presumptive Republican nominee John McCain as Democrats have tried to link him to Bush’s economic policies.
Paulson said the $152 billion economic stimulus plan enacted in February should help lift the economy as soon as the government checks, up to $600 for individuals, are put in the mail as early as May.