The Washington bureau will be covering the opening ceremony for the U.S. Capitol Visitor Center with Senate Majority Leader Harry Reid (D-Nev.), Senate Minority Leader Mitch McConnell (R-Ky.), House Speaker Nancy Pelosi (D-Calif.), and House Minority Leader John Boehner (R-Ohio
).

The Washington bureau will also be covering remarks delivered by Treasury Secretary Henry Paulson on “U.S.-China Strategic Economic Dialogue” and a discussion on how the housing crisis began with Jim Carr of the National Community Reinvestment Coalition; and Dean Baker of the Center for Economic and Policy Research.

Treasury Secretary Henry Paulson would not confirm where he would draw the line in defending the free market system (0:14).

 

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Treasury Secretary Henry Paulson said that although some of his decisions have been unpopular, they have been essential to preserving the free market system.

“Some of the things that I’ve been part of have been very, very objectionable decisions but they’ve not been difficult decisions because they are much [better] than the alternatives,” said Paulson during a forum on business and policy issues sponsored by Fortune magazine.

When asked if there was any line that he would not cross in order to protect the economy, the Secretary was reluctant to answer.

“You’re not going to get me to say ‘never’ and tell you where I’ll draw the line, because if you were to ask me the question a year ago, I would have drawn the line in a different place than I actually did when I was faced with the choice.”

Paulson explained that in order to combat the recent economic setbacks, there are several steps that need to be taken, such as creating more effective regulation in the financial system, establishing authorities to deal with non bank institutions, and updating infrastructure to better handle OTC derivatives. The Treasury Secretary contended that taking these actions warrants more immediate concern than finding the origins of the crisis.

“We don’t want to rush to a quick conclusion…we should be focusing on getting through the night first and then when recovery is well underway we can look in the rearview mirror and really understand the nature of the problem.”

“The turmoil will not end quickly and significant challenges remain ahead,” Secretary of Treasury Henry Paulson said during a press conference to update Americans on the efforts to end the financial crisis. Paulson stated that he was working with President Bush, Congressional leaders, and both Senators Obama and McCain to find an interim chief financial officer that would “maintain continuity” with Congress and the next administration. The housing correction has been repeatedly pointed to as the root cause for the current financial crisis, and Paulson ensured Americans that “Congress was correct to take swift and bold action.” Strong international partnerships must be created and maintained in order for the crisis to end, Paulson said, as he also believes that central banks around the globe are prepared to stabilize the markets.

“The Democratic side more than lived up to its side of the bargain. The legislation may have failed, the crisis is still with us,” said U.S. House of Representatives Speaker Nancy Pelosi (D-Calif.) during a press conference on the rejection of the Wall Street bailout plan by House Republicans.

According to Pelosi the bill was bipartisan. Democrats had put in language about capping CEO salaries and protecting about-to-be foreclosed homeowners keep their homes, and steps were taken to provide for congressional oversight.

Pelosi said that although the majority of the House Democrats heeded Secretary of Treasury Henry Paulson and President George W. Bush’s warnings regarding the need for the bailout plan, the House Republicans did not.

“We extend a hand of cooperation to the White House and to the Republicans so that we can get this issue resolved for the benefit of America’s working families, to strengthen our economy and therefore strengthen our country,” said Pelosi.

Chairman of the Financial Services Committee Barney Frank (D-Mass.) said that some members of the House had advised Paulson to make sure that his proposal was acceptable to both Wall Street and to the House Republicans, but that Paulson had not properly done that.

Frank said that the Bush administration should take the initiative to change the stance of the House Republicans.

The Democratic leadership disagreed with insinuations that the plan was derailed due to a partisan speech by Pelosi.

“I am appalled…We have come together on a bill to alleviate the crisis, and because somebody hurt their feelings they decide to punish the country? I would not have imputed them that degree of pettiness and hyper-sensitivity,” said Frank.

He went on to joke,

“There were 12 Republican members who were ready to stand up for the economic interest of America, but not if somebody said someting? Give me those 12 people’s names and I will go talk uncharacteristically nicely to them and tell them what wonderful people they are, and maybe they’d now think about the country.”

The plan was supported by 60 percent of the House Democrats and 67 percent of House Republicans voted against it.

In choosing which companies to save in this recent period, “We have acted on a case-by-case basis,” but “more is needed,” said Treasury Secretary Henry Paulson in a hearing today before the Senate Banking, Housing, and Urban Affairs Committee. Paulson sent a proposal to Congress that would give the Treasury Department $700 billion to buy out and run various companies the government plans to take over due to potential bankruptcy.

Paulson said that the government must “fundamentally and comprehensively address the root cause of this turmoil.” That turmoil, he says, is the housing market. He said the housing market is “choking off the flow of credit which is so vitally important to our economy.” Chairman of the Federal Reserve System Ben Bernanke echoed the sentiment that our economy will only improve when the housing market improves.

Many senators had similar problems with Paulson’s proposal. Sen. Chris Dodd (D-Conn.) said of Paulson’s proposal that, “It would do nothing to help even a single family save a home.” Senator Chuck Schumer (D-N.Y.) said that any bill would have to account and include the taxpayers, housing market, oversight, and regulation. He used the acronym “THOR” to refer to those four issues. Sen. Chuck Hagel (R-Neb.) said that the proposal must include more accountability and transparency. He also said that Congress must drastically rethink its economic policies for “a 21st century global marketplace.” Sen. Michael Enzi (R-Wyo.) said that because the proposed bill would cost each U.S. citizen approximately $2,300, they had to be accounted for.

Speaking to reporters in the Rose Garden President George W. Bush, joined by the Chairmen of the Federal Reserve Board and the Securities and Exchange Commission Ben Bernanke and Chris Cox and the Secretary of Treasury Henry Paulson, speaks about government action in financial markets. Bush explains the current economic crisis and steps that the U.S. government is taking or plans to take to restore balance, liquidity, and investor confidence to the market. (9:04)

 

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House Majority Leader Steny Hoyer (D-Md.) waded into presidential politics criticizing the Bush administration’s policies as Republican are casting themselves of agents of change. “It’s difficult to understand how somebody who voted with the administration 90 percent of the time can project themselves as an agent of change,” he said in reference to Republican presidential nominee Sen. John McCain. Hoyer criticized job growth saying , “It’s been one of the slowest eight years in recent history. You’d have to go back to the Hoover administration to see worse…” He also compared the job growth numbers in the last eight months of the Clinton administration with those of the past year.

He said that a comprehensive energy bill in the House is a possibility in the upcoming week. The House Republicans have been clamoring for their “All of the Above” energy bill to be brought to the floor since the session adjourned in August. One of the principle complaints has been the moratorium of new oil and natural gas drilling offshore. Hoyer said that the Republicans have been passing moratorium language for the last eight years without striking it in conference.

Hoyer said he had spoken with the Secretary of the Treasury Henry Paulson about the government take over of the mortgage giants Freddie Mac and Fannie Mae. Hoyers said that he agreed that this action was a necessary one at this point and time.

Briefer Scott Stanzel

Schedule
This morning the president had his normal briefings.
He will be meeting with the Secretary of Treasury, Henry Paulson for a regular update on the economy comments. The office on Community and Faith-Based Initiatives are having a roundtable today to talk about the role that faith-based groups may have in disaster preparedness and emergency response.

When asked if the president had any reaction to reports that Palestinian President Mahmoud Abbas said that he would resign if there is not any meaningful progress in the peace process, Stanzel said that he wasn’t sure if the president had discussed it in private meeting. He reiterated the president’s view that both Abbas and Israeli Prime Minister Ehud Olmert are two men who are committed to peace ad moving the process forward. Stanzel said that the president remains optimistic but that if it were an easy process it would have been resolved already.

The topic of the strategic oil reserve came up and Stanzel said the Congress did pass a bill to halt the fill of the strategic reserve. He said that the president will sign that legislation. While the White House thinks this measure won’t have a meaningful impact Stanzel said that President Bush is not going to stand in the way of it. Because of the legislation the Department Energy has to regularly enter into contracts to sustain the filling of the reserve. Stanzel said that the DOE took the initiative to not enter into new contracts because the legislation passed with such bipartisan support. Stanzel said that he hopes this legislation won’t distract members of Congress from real priorities, like increasing production in an environmentally sensitive way. (more…)