Treasury Secretary Henry Paulson said Monday that the US banking system is "safe and sound" despite growing financial turmoil and that Americans can be confident that their accounts are safe. "Our banking system is a safe and a sound one," he said in a rare White House briefing, just hours after the Lehman Brothers investment bank declared bankruptcy, the latest high-profile casualty of the US economic crisis.
Paulson cited a US government guarantee that protects individual bank depositors up to 100,000 dollars, "so the American people can be very, very confident about their accounts in the banking system." He spoke to reporters after meeting with US President George W. Bush, who said earlier that he was working to "minimize the impact" of what he called "painful" economic shifts.
Paulson expressed confidence in "in the soundness and the resilience of our financial system" through what he described as "a difficult period" in which US capital markets "work off some of the past excesses." "When I look around the world and look at the long-term economic fundamentals we have in this country, I think they compare favourably with what I see in any major developed country in the world," he said.
The US Treasury chief repeated his call for US regulatory overhaul, envisioning "streamlined and more effective regulation." Paulson reiterated that the US housing crisis was at "the root" of the ongoing troubles, and predicted "there is a reasonable chance that the biggest part of that housing correction can be behind us in a number of months."
"I'm not saying two or three months, but in months, as opposed to years," he said, adding that the United States will have lingering housing and mortgage "issues" for years. Paulson repeatedly brushed aside questions about whether the Bush administration ought to shoulder at least some of the blame for the crisis, saying: "I'm playing the hand that was dealt me." "I'm dealing with the consequences of things that were done often many years ago," he said, citing congressionally chartered mortgage giants Freddie Mac and Fannie Mae "going back decades."
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