Washington - Treasury Secretary Henry Paulson on Wednesday
warned that more banks would fail as the US financial system goes
through a tough period of restructuring, and promised to use all
powers at his disposal to ease the economic fallout.
Paulson asked for 'patience' from the public and said it would
take 'several weeks' before the US Treasury began buying up troubled
mortgage assets at the heart of the credit crisis.
Legislation passed by Congress last week allows the Treasury to
buy up to 700 billion dollars in mortgage-backed securities and boost
the capital positions of struggling financial institutions, in an
effort to keep credit flowing through the US economy.
Congress passed the measure after a wave of bankruptcies, bail-
outs and takeovers of banks and mortgage lenders through September in
the United States. Paulson warned that there were more collapses to
come.
'One thing we must recognize: even with the new Treasury
authorities, some financial institutions will fail,' he told
reporters in Washington.
The rescue package 'doesn't exist to save every financial
institution for its own sake,' Paulson said.
He suggested that more measures to ease the credit crunch were
still in the pipeline. Paulson warned the financial turmoil 'will not
end quickly' but said he was confident in the resilience of the US
economy.
'We are a strong and wealthy nation, with the resources to address
the needs we face,' he said.
Later this week in Washington, Paulson will host finance ministers
and central bank heads from the Group of Seven (G7) industrial
nations to discuss the international response to the credit crisis.
Paulson announced a 'special meeting' of the Group of 20, which
includes emerging economies, on the sidelines of annual gathering of
the International Monetary Fund and World Bank over the weekend.
Members of the G20 'will discuss how we might coordinate to lessen
the effects of global market turmoil and the economic slowdown on all
of our countries,' he said.
USA
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