Photograph of, from left, Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and President George Bush at the G20 ministerial meeting by Evan Vucci/AP
So, as the NY Post puts it, "The Bush administration is racing to rescue its rescue plan." Previously, the $700 billion bailout's focus was toxic debt but now, as Treasury Secretary Henry Paulson mentioned on Friday night, the government is considering injecting banks with capital to help the credit squeeze. The move basically gives the country ownership of banks and the NY Times writes:
As recently as Sept. 23, senior officials had publicly derided proposals by Democrats to have the government take ownership stakes in banks.
The Treasury Department’s surprising turnaround on the issue of buying stock in banks, which has now become its primary focus, has raised questions about whether the administration squandered valuable time in trying to sell Congress on a plan that officials had failed to think through in advance.
It has also raised questions about whether the administration’s deep philosophical aversion to government ownership in private companies hindered its ability to look at all options for stabilizing the markets.
President Bush, who had an early morning press conference yesterday about talks with G7 finance ministers, also attended a G20 meeting yesterday at the IMF, where he reportedly said "he was doing all he could to involve countries in efforts to resolve the crisis." In fact, the crisis has turned the lame duck president into someone with a lot on his plate. The AP notes how the economy prompted Bush to keep a busy schedule; he even said earlier this week, "It looks like I'm going to have a lot of work to do between today and when the new president takes office."
In other economic news: Representative Barney Frank said that Congress will consider an economic stimulus package for the middle class. There could be a number of bank mergers on the horizon. And Newsweek's Fareed Zakaraia suggests that as painful as the crisis, the silver lining is that it'll help America kick bad habits for the better.
