Washington, April 14: Defending the bailouts for banks hit by economic crisis, US President Barack Obama today said every dollar of capital in a bank can result in 8-10 dollars of loans for families and businesses, thus help fasten the pace of economic growth.
Warning that tough times were not yet over and 2009 could actually be even a more difficult year, Obama said that there was no choice "but to attack all fronts of our economic crisis at once" to thwart a vicious economic downturn.
Speaking on the current affairs of economy at Georgetown University here, Obama said there have been some encouraging news with regard to the impact of measures taken by the
administration, such as the Recovery Act, bank capitalisation programme, the housing plan, the strengthening of the non-bank credit market, the auto plan, and those at G-20 meeting.
"This is all welcome and encouraging news, but it does not mean that hard times are over. 2009 will continue to be a difficult year for America’s economy.
The severity of this recession will cause more job loss, more foreclosures, and more pain before it ends.
"The market will continue to rise and fall. Credit is still not flowing nearly as easily as it should. The process
for restructuring AIG and the auto companies will involve difficult and sometimes unpopular choices.
"All of this means that there is much more work to be done," he noted.
Obama said there were some who argue that the government
should stand back and simply let these banks fail, especially
since in many cases it was their bad decisions that helped
create the crisis in the first place.
"But whether we like it or not, history has repeatedly
shown that when nations do not take early and aggressive
action to get credit flowing again, they have crises that last
years and years instead of months and months – years of low
growth, low job creation, and low investment that cost those
nations far more than a course of bold, upfront action."
The President further said that the economy could not be
rebuilt "on the same pile of sand" and it must be built "upon
a rock."
Charting out a five-pillar foundation programme to revive
the economy and "make this new century another American
century", Obama said, "These include new rules for Wall
Street, new investments in education, new investments in
renewable energy and technology, new investments in health
care and new savings in our federal budget to bring down the
debt for future generations."
Obama pointed out that the banks were not the only
casualities in the crisis, and the government in next few
weeks would "reassess the state of Chrysler and General
Motors".
"It is our fervent hope that in the coming weeks, Chrysler will find a viable business partner and GM will
develop a business plan that will put it on a path to profitability without endless support from the American
taxpayer," Obama added.
Remembering the recent meeting of the world`s top 20 economies, Obama said that each country has "undertaken
significant stimulus to spur demand. All agreed to pursue together regulatory reforms."
Noting that America`s success depends on whether other nations have the ability to buy what we sell, Obama said, "We
pledged to avoid the trade barriers and protectionism that hurts us all in the end. And we decided to meet again in the
fall to gauge our progress and take additional steps if necessary."
Obama, however, asserted that he does not "accept a future where the jobs and industries of tomorrow take root
beyond our borders" and it was the time for America to lead again.
Reacting to criticism that the government was spending with reckless abandon, Obama said "the worst thing that we could do in a recession this severe, is to try to cut government spending at the same time as families and
businesses around the world are cutting back on their spending".
Bureau Report
