BUSH – NO DEAL! – as capitalism crashes


Bush made a two-minute statement on the White House Lawn yesterday following his failure to get agreement on Treasury Secretary Hank Paulson’s massive $700 billion bank rescue deal.

He said: ‘We continue to work with the Congress on a rescue plan.

‘And we need a rescue plan.

‘This is a – it’s hard work, our proposal is a big proposal.

‘And the reason it’s big, and substantial, is because we’ve got a big problem. We also need to move quickly.

‘Now, any time you have a plan this big, that is moving this quickly, that requires legislative approval, it creates challenges.

‘Members want to be heard, they want to be able to express their opinions and they should be allowed to express their opinions.

‘There are disagreements, over aspects of the rescue plan but there is no disagreement that something substantial must be done.

‘The legislative process is sometimes not very pretty.

‘But we are going to get a package passed.

‘We will rise to the occasion. 

‘Republicans and Democrats will come together and pass a substantial rescue plan.

‘Thank you very much,’ he concluded and left without taking questions.

The proposal would have seen the government buy bad debts from US banks to prevent more of them collapsing.

The plan has been blocked by a group of Republican Congressmen who have accused Bush of wanting to introduce ‘socialist’ measures.

Bush’s statement followed Thursday night’s ‘shouting match’, with Republican legislators several times walking out of Thursday night and yesterday morning’s talks.

Afterwards Senate Banking Committee chair, Democrat Christopher Dodd, said: ‘we won’t accept a plan that includes bonuses for Wall Street’.

Earlier the Federal Reserve banned the sale of mint gold coins.

On Thursday, the US had suffered the biggest single bank collapse in its history, the Washington Mutual (WaMu).

Set up in 1889, WaMu has 2,239 branches in 15 states and had 43,198 employees on 30 June.

Regulators were forced to shut it down, take control and sell off the mortgage lender.

The Office of Thrift Supervision (OTS) sold its assets to JPMorgan Chase for $1.9bn (£1bn) after $16.7bn of deposits had been withdrawn in ten days.

Regulators were quick to reassure customers that WaMu would be trading as usual despite the change of ownership. To get the rescue deal agreed saw the cancellation of the evening presidential candidates’ debate.

Share prices on the Dow Jones Index slumped another 130 points shortly after Wall Street opened and in London the FTSE 100 was down 116 points.

UK bank and insurance share prices were down, with Lloyds TSB down 6.6%, Prudential down 4.77%, Standard Life down 4.84% and HSBC down 1.7%.

Share prices in UK bank Bradford & Bingley fell another 20% to 17 pence before recovering slightly.

Banks continued to cut costs, with HSBC saying it would axe 1,100 jobs.