President George W. Bush sought to reassure Americans on Saturday the US government had no intention of becoming a permanent shareholder in private banks, and will later consult with European leaders about the financial crisis that sent tremors through their economies.
Bush said the $700 billion rescue package the government will use to buy equity shares in some banks and purchase some troubled assets will help get loans flowing to consumers and businesses. "Had the government not acted, the hole in our financial system would have grown larger," Bush said in his weekly radio address.
The plan to inject $250 billion in capital into US banks in exchange for preferred shares has raised concerns about government interference in the private sector. Bush sought to allay those fears by saying the government's involvement would be limited and the goal was to encourage banks to buy back their shares when markets stabilised.
"The government will not exercise control over any private firm, and federal officials will not have a seat around your local bank's boardroom table," Bush said. "The shares owned by the government will have voting rights that can be used only to protect the taxpayer's investment - not to direct the firm's operations," he said.
A credit crisis that swept around the globe has pummelled markets, leaving the United States and its European allies searching for ways to cushion the shock to financial systems. Bush will meet French President Nicolas Sarkozy and European Commission President Jose Manuel Barroso later Saturday at the Camp David presidential retreat in Maryland.
Sarkozy has called for an overhaul of the current international financial architecture established just after World War II at the 1944 Bretton Woods conference. Bush has not made any public comments about that proposal and White House aides say the focus at the Camp David meeting will be addressing the immediate crisis.
"Many leaders and economies have ideas to improve the global financial system," White House spokesman Tony Fratto said. "We should be listening to all good ideas. I'm certain leaders in Europe aren't recommending that we simply impose a structure on the rest of the world without the input from other economies," he said.
Sarkozy, whose country holds the rotating European Union presidency, said he would like to see a Group of Eight leading nations summit next month in New York. The White House said a date and venue for the global leaders meeting, expected by year end, would not be set at the three-hour meeting. Treasury Secretary Henry Paulson and Secretary of State Condoleezza Rice accompanied Bush to Camp David. The White House said no new policy announcements were expected.