Bush announces bank rescue plan

Mr Bush made the announcement before the US markets opened on Tuesday

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Tuesday, 14, Oct 2008 02:25

US president George Bush has announced that the government is to buy up stakes in the country's leading banks.

Mr Bush made the announcement outside the White House before the US markets opened on Tuesday.

The move is expected to cost $250 billion (£143 billion), with half of the money going to the top nine US banks to allow them to start lending to each other again and the other half going to thousands of other smaller banks.

In his address, Mr Bush said the measures would allow money to flow more freely between banks and thereby allow American citizens to borrow the money they needed.

He said the injection would provide small business owners with "peace of mind" and bring "greater security to the banking system".

Mr Bush said he wanted to make clear that each of the measures contained safeguards to protect the United States tax payer.

He added that the injection was "not intended to take over the free market but preserve it," claiming it was "the latest in a series of systematic approaches to the financial crisis".

"I know Americans are deeply concerned by the crisis", Mr Bush said, "I recognise that the actions leaders are taking can seem distant from those concerned but these efforts are directly aimed at helping citizens."

"It will take time for our efforts to make an impact."

Mr Bush said the strategy was "broad, flexible and aimed at the root cause" of the current crisis.

Writing in the Wall Street Journal on Tuesday, Federal Reserve chairman Ben Bernanke said: "These steps will allow us to restore more normal market functioning and encourage private capital to further support the reinvigoration of financial markets."

Today's announcement follows the actions of the UK and other European nations which have seen markets rally after unprecedented losses.