global partners to achieve the goals we seek. >> join us for our conversations saturday at 8:00 p.m. eastern on c-span and c-span.org or listen with this -- with the free c-span radio app. the 10 years anniversary of the financial crisis which saw the collapse of the u.s. housing market and brought the economy close to a second great depression. the months of september and october of 2008 included a number of important developments. the government took over the home mortgage holding companies fannie and freddie mack, lehman brothers declared bankruptcy prompting the stock market to drop 500 points in the bush administration announced the troubled asset relief program which was rejected by the house of representatives but past in early october. we are going to show you what public officials were saying

about the financial crisis at the time followed by a recent discussion at the brookings institution marking the 10 year anniversary. we begin with treasury secretary henry paulson speaking with reporters at the white house on september 15, 2008. the same day as the lehman others bankruptcy. >> good afternoon, everyone and i hope you had an enjoyable weekend. as you know, we are working through a difficult time in our financial markets right now as we work off some of the past excesses. the american people can remain confident in the soundness and the resilience of our financial system. i commend the sec and the fed for their work over the weekend. including leaders to meet the current challenges and put measures in place to reduce market stressors.

the strength and stability of markets is important to every american, to the ability to find when dancing for college tuition and finance small business expansion. let me step back and provide perspective. the housing correction is at the root of the challenges facing our markets and financial institutions. i believe that we have taken important steps with respect to fannie mae and freddie mac and they are amongst the most important actions we can take to

work through this turmoil. lastly, i am committed to working with regulators here and abroad as well as policymakers in congress to take additional necessary steps to maintain the ourility and orderliness of financial markets. thank you all and let me take your questions. >> can you talk about what the federal role should be going forward, i would likely to see anymore federal involvement rescues like we saw? >> the federal role is important because as you have heard me say, nothing is more important than our stability of our capital markets. i think it is important to regulators that we are very vigilant. we do not take lightly ever putting the taxpayers on the line to support an institution.

>> should we read that as no more? >> it is important for us to maintain the orderly of our financial system. it is something i do not take lightly. the other thing i want to focus on is the way our financial system came together that those institutional leaders coming together to do things to support the market and that is what i want to see continue to happen here. >> can you just tell us how this happened and how did we get there? beyond housing correction, take us back. how did we get here? >> first of all, we have access that has built up for a long period of time. number two, we have an archaic financial structure. it came in place after the depression. it really needs to be rebuilt. then there are certain things

like fannie and freddie. the roots of that, what we are doing is living up to our responsibilities which were rooted in congressional charters. they go back and it has been perpetuated by washington. again, what we are focused on right now, i think is the future. the future is stability in our financial markets and working through this period and that is what we are doing. >> a future with what kind of regulation? >> there has got to be a balance between regulation and market discipline. you cannot rely on want to solve the problem but it will have to be streamlined and more effective regulation. there are major changes that we need and we also need major authorities to wind down financial institutions that are not banks, are not federal institutions with deposit insurance.

we need resolution that authorities to let us deal with situations like this. >> how concerned are you about commercial banks and what reassurance can you offer the checking account? >> our banking system is a safe and sound one. since the day when we have had federal deposit and insurance in place, we have added a depositor that has less than $100,000 in their account. the american people can be very confident about their accounts in our banking system. let me just make sure. >> i would like to ask two things. can you explain more about the additional authorities that you think might be needed that will be additional regulation or legislation? >> in the intermediate longer term, we are going to need major regulatory change.

i have spoken a lot about that. we can use additional authorities to deal with financial institutions. that will take longer for congress to do. right now we are working with the tools that we have. what you are finding is the fed, the sec, the treasury, we are all working together and will do what is necessary to protect the system with the tools we have. >> mr. secretary, this morning senator mccain promised in regards to the economy that they will never put america in this position again. the running mate sarah palin said when it comes to the economy, it is ineffective. what blame should the bush administration take for the economic system in the united states? have you been asleep at the

switch and ineffective? >> we are in the middle of a presidential campaign. we are going to let the campaign's fight it out and make their cases to the american people. i am not focused on politics. i am not looking back, i am looking forward. this president is very committed to the stability of the financial system, it's important to the economy. >> the economy has not gotten better. the situation is getting worse. >> i am playing the hand that has dealt me. i'm dealing what the -- with the consequences of things that were done many years ago. as i said with the case to freddie and fannie, that is congressional charters going back decades. that is what washington has put in place. what we are living with his dealing with our responsibilities. we are dealing with the situation as we see it and i'm focused on the stability and the importance to the american people.

>> why did you agree to support the bailout for bear stearns but not laymen? >> the situation in march in the situation in the facts around bear stearns were very different to the situation we were looking at here in september. i never once considered that it was appropriate to put taxpayer money on the line with lehman brothers. here, again, i want to commend the financial institutions them around the world for coming together and really taking some very constructive, positive steps to make our market work here. >> on september 24, president bush addressed the nation in primetime, calling on congress to have a plan called tarp, which would expand the financial markets and stabilize the banking system. pres. bush: this is an extraordinary period for

america's economy. many americans of felt anxiety about the finances and their future. i understand there were he and -- in their worry and their frustration. we have seen triple digit swings in the stock market. major financial institutions have teetered on the edge of collapse and some have failed. as uncertainty has grown, many banks have restricted lending. credit markets are frozen and families and businesses have found it harder to borrow money. we are in the midst of a serious financial crisis. the federal government is responding with decisive action. we boosted confidence in money market mutual funds and acted to prevent major investors from driving down stocks for their own personal gain. most importantly, my administration is working with congress to address the root cause behind much of the instability in our markets. financial assets reloaded to home mortgages have lost value during the housing decline. in the banks holding these assets have restricted credit.

as a result, our entire economy is in danger. i propose that the federal government reduce the risk opposed by the assets and supply urgently needed money so banks and other financial institutions can avoid collapse and resume lending. this rescue effort is not aimed at preserving any individual company or industry. it is aimed at preserving america's overall economy. it will help american consumers and businesses get credit to meet their daily needs and create jobs. it will help send a signal to markets around the world that america's financial system is back on track. i know many americans have questions tonight. how did we reach this point in our economy? how will the solution i propose work? and what does this mean for your financial future? these are good questions and they deserve clear answers.

first, how did our economy reach this point? most economists agree that the problems we are witnessing today developed over a long period of time. for more than a decade a massive amount of money flowed into the united states from investors abroad because our country is an attractive and secure place to do business. this large influx of money to u.s. banks and financial institutions, along with low interest rates, made it easier for americans to get credit. these developments allowed more families to world money for cars, homes and college tuition. some for the first time. they allowed more entrepreneurs to get loans to create jobs. unfortunately, there were also some serious negative consequences, particularly in the housing market. easy credit combined with home values would continue to rise. it led to access isn't bad decisions. many mortgage lenders approve loans without carefully

examining their ability to pay. many borrowers took out loans larger than they could afford, assuming they could sell or refinance their homes at a higher price later on. optimism about housing values led to a boom in home construction. the number of new houses exceeded a number of people willing to buy them. and with supply exceeding demand, housing prices failed. this created a problem. borrowers with adjustable rate mortgages planning to sell and refinance their homes at a higher price respect with homes worth less than expected. along with mortgage payments they could not afford. as a result, many mortgage holders began to default. these widespread defaults had effects far beyond the housing market. in today's mortgage industry, home loans are often packaged together and converted into financial products called mortgage-backed securities.

these securities were sold to investors around the world. many investors assume these securities were trustworthy. and asked a few questions about their actual value. two of the leading purchasers were fannie mae and freddie mac. because these companies were chartered by congress, many believed they were guaranteed by the federal government. this allowed them to borrow enormous sums of money, fueled the markets of questionable investments, and put our financial system at risk. the decline in the heisey -- in the housing market set off a domino effect across our economy. went home values declined, borrowers defaulted on their mortgages and investors holding mortgage-backed securities again to incur serious losses. before long be securities became so unreliable that they were not being bought or sold. investment banks such as bear stearns and lehman brothers found themselves saddled with large amounts of assets they could not sell. they ran out of money needed to meet their immediate obligations.

they face imminent collapse. other banks found themselves in severe financial trouble. these banks begin holding onto their money and lending dried up. in the news of the american financial system began grinding to a halt. with the situation becoming more precarious by the day, i faced a choice to step in with dramatic government action, or to stand back and allow irresponsible actions of some to undermine the financial security of all. i am a strong believer in free enterprise. my natural instinct is to oppose government intervention. i believe companies that make bad decisions should be allowed to go out of business. under normal circumstances i would have followed this course. but these are not normal circumstances. the market is not functioning properly. there has been a widespread loss of confidence and major sectors of america's financial system

at risk of shutting down. the government's top economic experts warn immediate action by congress, america could slip into a financial panic and a distressing scenario would unfold. more banks could fold including some in your community. the stock arc it would drop even -- the stock market would drop even more, which would reduce the value of your retirement account. the value of your home could plummet. foreclosures would fall -- rise dramatically. if you are on a farm, you would find it harder to get credit. more businesses would close their doors and millions of americans could lose their jobs. even if you have good credit history, it would be more difficult for you to get the loans you need to buy a car or send your children to college. ultimately, our country could experience a long and painful recession. fellow citizens, we must not let this happen. i appreciate the work of leaders from both parties and both houses of congress to address

this problem. and to make improvements to the proposal my administration sent to them. there is a spirit of cooperation between democrats and republicans and maturing -- and between congress in this administration. i have invited senators mccain and senator obama to join parties at the white house to mod to help speed our discussion towards a bipartisan bill. i know that an economic rescue package would present a tough mode for many members of congress. it is difficult to pass a bill that commits so much of the taxpayers hard-earned money. i also understand the frustration of responsible americans who pay their mortgages on time, file their tax returns every april 15, and are reluctant to play the cost of excesses on wall street. but given the situation we are facing, not passing a bill now would cost these americans much more later. many americans are asking how would a rescue plan worked. after much discussion there is widespread agreement on the

principles such a plan would include. it would remove the risk of troubled assets, including mortgage-backed securities now causing the financial system. -- clogging the financial system. free banks resume the flow of credit to american families and businesses. any rescue plan should be designed to ensure that taxpayers are protected. it should welcome the participation of financial institutions large and small. it should make certain that failed executives do not receive a windfall from your tax dollars. it should establish a bipartisan board to oversee the plans and implementation. it should be enacted as soon as possible. in close consultation with the treasury secretary, federal reserve chairman and sec chairman, i announced the plan on friday. first, the plan is big enough to solve a serious problem. under our proposal the federal government would put up to 700 billion taxpayer dollars on the

line to purchase troubled assets that are clogging the financial system. in the short term this will free up banks to resume the flow of credit to american families and businesses, and this will help our economy grow. second, as markets have lost confidence in mortgage-backed securities, their prices have dropped sharply. yet, the value of many of these assets will likely be higher than their current price because the vast majority of americans will ultimately pay off their mortgages. the government is the one institution with the patients and resources to buy these assets at their current low prices and hold them until markets return to normal. when that happens, money will flow back to the treasury as these assets are sold. we expect that much, if not all of the tax dollars we invest will be paid back. >> on september 29, 2008, the

house of representatives failed to pass the trouble asset relief program, prompting the stock market crash of one and 700 points. the final passage came on october 3 after the senate sent the bill to the house for a second vote. it is then senator and presidential candidate barack obama from the senate floor speaking on october 1. senator obama the fact that we : are even here voting on a plan to rescue our economy from greed and irresponsibility of wall street, and some in washington, is in outrage. it is an outrage to every american who works hard, pays their taxes and is doing the best every day to make a better life for themselves and their families.

and understandably people are frustrated and angry. wall street's mistakes have put their tax dollars at risk and they should be. i am frustrated and angry as well. but while there is plenty of blame to go around, and many in washington and wall street who deserve it, all of us, all of us have a responsibility to solve this crisis because of the financial well-being of every single american. there will be time to punish those who set this fire, but now is not the time to argue about how that happened, or the neighbor's sleeping in his bed, right now we want to put out the fire. now is the time for us to come together and do that. the house of representatives failed to act on monday. we saw the single largest decline in the stock market in two decades. over $1 trillion of wealth was lost by the time the markets closed. it was not just the wealth of a few ceos or wall street executives. the 401(k)s and retirement accounts of millions became smaller.

the same pension funds, the government employees lost billions upon billions of dollars. hard-working americans who invested their nest egg to watch it grow side diminish and in some cases, disappear. while that the client was devastating, the consequences of the credit crisis will be even worse if we do not act now. it is a very dangerous situation. financial institutions across this country are afraid to lend money. if all that meant was a failure of a few banks in your, that -- in new york, that would be one thing. that is not what it means. what it means is if we do not act, it will be harder for americans to get a mortgage for their home, or loans they need to buy a car or send their children to college. what it means is businesses will not be able to get the loans they need to open a new factory or make payroll.

if they cannot make payroll on friday, that workers are laid off on monday. if workers are laid off on monday then they cannot pay their bills or paid back their loans to somebody else. it will go on, and on, and on, rippling through the entire economy. potentially, we could see thousands of businesses close. millions of jobs could be lost, and a long and painful recession could follow. in other words, this is not just a wall street crisis, it is an american crisis. it is the american economy that needs this rescue plan. i understand completely why people would be skeptical when this president asked for a blank check to solve this problem. i was as well, as was senator dodd and a whole bunch of us. that is why over a week ago i demanded that this plan include some specific proposal to protect taxpayers. protection that the administration agreed to and

thanks to the hard work of senator dodd and senator gray, we here in the senate have agreed to and hopefully the house will agree to it as well. let me just go over those principles. number one, i said we needed an independent board to provide oversight and accountability for how and where this money is spent every step of the way. number two, i said that we cannot help banks on wall street without helping the millions of innocent homeowners who are struggling to stay in their home. they deserve a plan as well. number three, i said i would not allow this plan to become a welfare program for wall street, whose greed and irresponsibility got us into this mess. finally, i said that the american taxpayers are financing this solution and they have to be treated like investors. they should get every penny of their tax dollars back once the economy recovers. this last part is important because it has been the most

misunderstood and poorly communicated part of this plan. this is not a plan to just hand over $700 billion of taxpayer money to a few banks. if this is managed correctly, and that is an important if, we will hopefully get most or all of our money back and possibly even turn a profit on the everybody of which will go directly back to the american people. if we fall short, we will levy a fee on financial institutions of they can repay the losses that they caused. acknowledge, even with all these taxpayer protections, this plan is not perfect. democrats and republicans in congress have legitimate concerns about. some of my closest colleagues still have problems with it in may choose to vote against this bill. i think that we can respectfully disagree.

i understand their frustrations. i know that many american share their concerns. myis clear that from perspective this is what we need to do right now. to prevent the possibility of a crisis turning into a catastrophe. , it isonceivable possible that if we did nothing, everything would turn out ok. we cannot afford to take a risk that the worldwide economy could be plunged into a very deep hole. republicanss and who oppose this plan, i say, step up to the plate, let's do

its right for the country at this time. the time to act is now. >> our program on the 10 year anniversary of the financial crisis continues with treasury secretary henry paulson and ben bernanke speaking with reporters about 10 days after the program was signed into law. >> good morning. america is a strong nation. we are a confident and optimistic people. of aonfidence is born out long history of meeting every challenge we face. time and again, our nation has faced adversity and time and again we have overcome it and driven to new heights. -- risen to new heights. this time will be no different. the result lack of confidence in our financial system. a lack of confidence that must be conquered because it poses an

enormous threat to our economy. investors are unwilling to lend to banks and healthy banks are unwilling to lend each other and to consumers and businesses. in recent weeks, the american people have felt the effects of a frozen financial system. values inseen reduced their retirement and investment accounts. they have worried about meeting payrolls and they have worried about losing their jobs. all across our nation have gone through long days and long nights of concern about their financial situations today in their financial situations tomorrow. without confidence that their most basic financial needs will be met, americans lose confidence in our economy and this is unacceptable. bush has directed me to consider all necessary steps

to restore confidence and stability to our financial markets and get credit flowing again. ago, congress gave important new tools to the treasury, the federal reserve and the fdic to meet the challenges posed by our economy. i colleagues and i are working creatively and collaboratively to deploy these tools and direct at this disruption in our economy. we are taking decisive actions to protect the u.s. economy. we regret having to take these actions. today's actions are not what we ever wanted to do, but today's actions are what we must do to restore confidence in our financial system. announcing that the treasury will purchase equity stakes in a wide variety of banks. government owning a stake in any

private u.s. company is objectionable to most americans, me included. the alternative of leaving businesses and consumers without access to financing is totally unacceptable. when financing is not available, consumers and businesses shrink their spending, which leads to businesses cutting jobs and even closing up shop. outcome, -- that outcome, we must restore confidence in our financial system. the first step is to make capital available to a broad array of banks and thrifts so that they can provide credit to our economy. billion financial rescue package, treasury will make $250 billion in capital available to u.s. financial institutions in the form of preferred stock.

institutions that sell shares to the government will accept restrictions on executive compensation, including a provision and a ban on golden parachutes during the. -- during the time we hold equity in this program. only own will not shares that should be paid back with a reasonable return, but shares inreceive participating institutions. we expect opposite debating -- offices of hitting banks to increase their efforts to help struggling homeowners avoid foreclosure. theclosure not only hurts family who lose their homes, it is communities and our economies at a whole -- as a whole. while many banks have suffered significant losses, many others have plenty of capital to get through this time but are not positioned to lend as widely as

necessary to support our economy. our goal is to see a wide array of healthy institutions to help raise additional private capital so that they can make more loans to businesses and consumers across the nations. -- nation. at a time when offense naturally make even the most airing investors risk-averse, the needs of our economy require that are financial institutions not take this new capital to hoard it but to deploy it. nine large financial institutions have already agreed to participate in this program. they have agreed to sell preferred shares to the u.s. government on the same terms that will be available to a broad array of small and middle acrossanks and thrifts our nation. these are healthy institutions and they have taken this step for the good of the u.s. economy.

as these healthy institutions increase their capital base, they will be able to increase their funding to u.s. consumers and businesses. i am jointer this morning by chairman ben bernanke and sherman bear who have taken extreme actions to support investor confidence in our financial system so that funds will flow through our banks to the u.s. economy. each of them will describe their actions. combined, our actions are , powerful, and transformative. they demonstrate that the government will do what is necessary to restore what our economy depends, powerful, and transformative. on and avoid the failure of any systemically important institution. strengthen steps significantly financial institutions and improve their access to funding, enabling them to increase their financing of

consumption and business investment that drives u.s. economic growth. andet participants here around the world can take great confidence from the powerful action taken today and our broad commitment to the health of the global financial system. we are acting with unprecedented speed, taking unprecedented measures that we never thought would be necessary. they are necessary to get our economy back and on an even keel and secure the confidence in the future of our markets, economy, and the economic well-being of all americans. thank you. now i'm going to turn the podium over to chairman ben bernanke. >> good morning. before i begin, i want to express my appreciation of my for their efforts in what has been an extraordinary collaboration. as americans well know, the

challenges are large and complex. i believe that the steps taken today will help us to overcome them. our strategy will continue to evolve and be refined as we adapt to new developments in the inevitable setbacks. into wenot stand down have achieved our goals of repairing and reforming our financial system and thereby restoring prosperity to our economy. over the past year, the fed has used all of its powers and authorities to try to help this economy through this difficult time. central banks around the world have consulted closely and cooperated in unprecedented ways to reduce strains in our financial markets and bolster our economies. we will continue to do so. come forhe time has more comprehensive and broad-based solutions. teaches us that

government engagement in times of severe financial crisis often arrives very late, usually at a point at which most financial institutions are insolvent. waiting too long to act has usually led to much greater direct costs of intervention and magnified the painful effects of financial turmoil on households and businesses. this is not the situation we face today. the congress and administration have acted in time when the great minority of financial remain capable of fulfilling their critical functions of providing new credits were economy. congresses action made possible the critical steps that we are now announcing. i find it heartening that we are not seeing just national but a global response to the crisis

commensurate with its global nature. this past weekend the finance ministers and central bankers of the g7 industrialized countries announced a set of principles embodied a comprehensive approach to dealing with the crisis. the steps we're taking today are fully consistent with those principles. problem is af the loss of confidence by investors and the public in the strength of key financial institutions and markets. that has had cascading and unwelcome effects on the availability of credit and the value of savings. the actions today are aimed at restoring confidence in our institutions and markets and repairing the capacity to meet the credit needs of american households and businesses. the voluntary equity purchase will strengthen financial institutions capacity and willingness to lend. the guarantee of senior debt of all fdic insured institutions

will restore the confidence of these institutions creditors and reinvigorate the crucial interbank lending markets. the federal reserve is pressing forward with its facility to provide a broad backstop to the commercial paper market, so vital to our businesses. globemakers around the have taken a series of steps, americans can be confident that every resources being brought to bear. historical understanding, technical expertise, economic analysis, political leadership. i'm not suggesting the way forward will be easy. i strongly believe that the application of these tools, together with the underlying vitality of the american economy, will help to restore confidence to our financial system and place our economy back on a path to healthy, vigorous growth. thank you. >> former new york federal reserve bank president tim

geithner was appointed to serve as treasury secretary during the obama administration. announced a new effort aimed at stabilizing the financial markets. following his remarks, we will show you a recent event with him and others marking the tenure anniversary of the financial crisis. -- 10 year anniversary of the financial crisis. >> last fall, congress acted quickly and courageously to give your government the emergency authority to help contain the damage. your government used that authority to help pull the financial system back from the edge of catastrophic failure. those actions were absolutely essential but they were inadequate. was notnt support comprehensive enough to withstand the acute pressure brought on by weakening economy. the spectacle of huge amounts of taxpayer assistance provided to the same institutions that helped cause the crisis added to public distrust. ass distrust turned to anger

some institutions continue to reward rich compensation packages and lavish perks to their senior executives. our challenge is much greater today. the american people have lost faith in the leaders of some of our financial institutions and their skeptical that their government has used taxpayer money in ways that will benefit them. this has to change. again, andit flowing to restore the faith of the american people, we are going to fundamentally reshape our program to repair the financial system. our work will be guided by the lessons of the last 18 months and financial crises throughout history. the basic principles that will shape our strategy are the following. believe that policy has to be comprehensive and forceful. there is more risk and greater cost in gradualism then there is an aggressive action. we believe that action has to be

recovery istil firmly established. in this country in the 1930's, in many cases elsewhere around the world, crises lasted longer and caused greater recovery is firmly established. damage because governments applied the brakes too early. we cannot make that mistake. we believe that access to public support is a privilege, not a right. in our government provide support to banks, it is not for the benefit of banks. it is for the businesses and families who depend on banks. it is for the benefit of the country. government support has to come with strong conditions to protect the taxpayer and transparency that allows the american people to see the impact of those investments. we believe in our policies -- that our policies must be designed to leverage private capital, not discourage private capital. when government investment is necessary, it should be replaced with private capital as soon as that is possible. we believe that the united

states have to send a clear and consistent message that we will act to prevent a catastrophic failure of financial institutions that would damage the broader economy. guided by these principles, we will replace the current program with a new financial stability plan designed to stabilize and repair the financial system and support the flow of credit that is necessary for recovery. this new financial plan will take a comprehensive approach, the department of the treasury, the federal reserve, and all the financial agencies in our country will bring the full force of the united states government to bear to strengthen our financial systems so that we get the economy back on track. these agencies have different authorities and responsibilities but we are one government serving the american people and we will work together as one. here's what we will do. our work begins with a new framework of oversight and governance on all aspects of our

plan. the american people will be able to see whether tax dollars are going and the return on their governments investment. whetherl be able to see the conditions are being met and enforced. they will be able to see whether boards of directors are being responsible and how they are compensating their executives. they will be able to see how these actions are affecting the overall flow of lending and the cost of borrowing. will give theents american people the transparency they deserve. on things weuild have already done. we have acted to ensure the integrity of the process that provides access to government support so that it is independent of influence from lobbyists and politics. we have committed to providing the american people the information on how their money is spent and under what conditions by posting these contracts on the internet.

we've outlined some strong conditions on executive compensation. framework, we are establishing three new programs to clean up the nation's banks, to bring in private capital, and to go around the banking system directly to the markets that consumers and businesses depend on. let me describe each of these three steps. first, we are going to require banking institutions to go through a carefully designed stress test. sheets their balance cleaner and stronger and we will help this process by providing a new program of capital support for those institutions. togethering to bring the agencies with authority over our nation's banks and initiate assessmentistent about the exposures on bank balance sheets and will introduce new measures to improve disclosures. that needitutions additional capital will be able to access a new funding

mechanism that uses capital from the treasury as a bridge to private capital. the capital come with conditions to help ensure that every dollar of taxpayer assistance is being used to generate a level of lending greater than what would've been possible in the absence of government support. this assistance will come with terms that should encourage these institutions to replace public assistance with private capital as soon as that is possible. in treasury's investments these institutions will be placed in a new financial stability trust. second, we will work together with the federal reserve and fdic to establish a public-private investment fund. this program will provide governorate -- government capital to leverage private capital to get private markets working again. this will be targeted to legacy loans and assets that are now burdening many financial institutions are providing the

financing that private markets cannot now provide. this will help start a market for the real estate related assets at the center of this financial market. our objective is to use private capital and asset managers to provide a mechanism for valuing these assets. we are exploring a range of different structures and will seek input from the public. we believe this program should ultimately provide up to $1 trillion in financing capacity. scale ofo started on a $500 billion and expanded based on what works. program, piece of this working with the federal reserve, we will commit up to $1 trillion to support consumer and business lending. will help kickstart the secondary lending markets to help bring down borrowing costs and to get credit flowing again. lending40% of consumer has typically been made available because people buy loans come up with them

together, and sell them. because this source of lending has frozen up, no financial recovery plan will be successful unless it helps restart the markets for sound loans made to consumers and businesses large and small. this program will be built on the federal reserve's term loan facility, announced last november. we have agreed to expand this program to target the markets that are critical for small loans,s lending, student consumer and auto finance, and commercial mortgages. addition, because small businesses are so important, will take additional steps to make it easier for them to get credit. we will increase the federally guaranteed portion of small business association loans and by giving more power to the fdic to execute loan approvals. we can turn around the decline

in lending we have seen in recent months. finally, we will launch a comprehensive housing program. millions of americans have lost their homes and millions more live at the risk that they will be unable to meet their payments or refinance their mortgages. many of these families borrowed by on their means. many others fell victim to terrible lending practices that left them exposed and with no way to read and ants -- refinance. homeowners are seeing the values of their homes fall because of forces they did not create and cannot control. this crisis has had devastating consequences. our government should've moved more forcefully to help contain the damage. housing will increase and continues with -- conditions will find a new balance. you are seeing that happen in parts of the country. we risk a spiral in which lenders foreclose, pushing house

prices lower, and reducing the value of household savings, aching it harder for all families refinance. the president has asked his economic team to come together with a comprehensive plan to address this crisis and we will announce the details in the next few weeks. our focus will be on using the full resources of the government to help bring down mortgage payments and reduce mortgage interest rates. we will do this with a substantial commitment of resources already authorized by the congress. , looking forward, president obama is committed to moving quickly to reform our entire system of financial regulation so that we never again face a crisis of the severity. we are consulting closely with chris dodd in the senate, on the frank in the house, in their colleagues on both sides of the ofle on the broad outlines reforms. the president's work is

beginning to develop detailed recommendations. we will work closely with the world's leading economies in preparation for the key 20 summit in london on april 2. the success of this plan, the success of our plan is going to require an unprecedented level of cooperation here and around the world. bair, johne, sheila i wantand john rich -- to thank them for helping shape this plan and want to thank them for their commitment to making it work. this program is going to require a substantial and sustained commitment of public resources. congress has already authorized financial resources for this effort and we are going to use those resources as carefully and effectively as possible. we will consult closely with the congress as we move forward. we will work together to make

sure that we have the resources and authority to make this work. later this week, i will be traveling to meet with the g7 , wence ministers in italy will start the process of working with our international partners to ensure that we are working together to help strengthen the global economy and to help repair the global financial system. we will work closely with the leadership of the imf and world bank so that they can deploy resources quickly to help those countries around the world that are most at risk from this crisis. discussede programs i involve very large numbers. it is important to recognize that these programs involve loans and investments with terms and conditions that will help protect the taxpayer and help compensate the government for the risk we are taking. because of these terms and conditions, the risk to the taxpayers will be less than the headline numbers. designigation is to these programs of that we are achieving the largest benefit in

terms of supporting recovery at the least cost to the taxpayer. we take that obligation extremely seriously. i want to be candid. the strategy will cost money. it will involve risk. it will take time. as costly as it may be, we know that the cost of a complete collapse of our financial system would be incalculable for families and businesses and for our nation. we are going to have to adapt our programs as conditions change. we will have to try things we never tried before. we will make mistakes. we will go through times in which things get worse and progress is uneven or interrupted. we will be guided by these core , dedicated to the objective of restoring credit to families and businesses and committed to moving our nation towards an economic recovery that is as swift and widespread as possible. more complexllenge

than any challenge our financial system has faced. it is going to require new programs and extra ordinary action. the president and his entire administration are committed to seeing it through because we know how directly the future of our economy depends on it. thank you very much. think you for coming. [applause] >> you have been watching events from 2008 on the financial crisis. featuring treasury secretary henry paulson, ben bernanke, and tim geithner. they sat down together recently at the brookings institution for discussion with the new york times financial columnist, an author of -- the author of "too big to fail."