WASHINGTON - President Bush defended the unprecedented federal intervention on Wall Street Friday to the tune of $3 trillion, saying the risks of no action "would be far higher."
"America's economy is facing unprecedented challenges. We're responding with unprecedented measures," Bush announced from the White House Rose Garden.
Click play for CBN News Financial Editor Drew Parkhill's analysis, following CBN News' Erick Stakelbeck's report.
Standing with him were top leaders from government's financial oversight departments, including Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and Christopher Cox, chairman of the Securities and Exchange Commission.
"This is a pivotal moment for America's economy," Bush said. He said the contagious bad loan dealings in the market had "spread throughout our financial system."
"This has led to an erosion of confidence that has frozen many financial transactions including loans to consumers and to businesses seeking to expand and create jobs," Bush said. "As a result we must act now to protect our nation's economic health from serious risk. There will be ample opportunity to debate the origins of this problem. Now is the time to solve it."
Paulson agreed that, though a potential financial market 'lending program' would be expensive, doing nothing would cost far more. The Treasury Department has said it will tap into a $50 billion fund created during the Depression to provide temporary guarantees.
Wall Street Woes Coming to an End?
The moves mean there may be light at the end of the tunnel for Wall Street.
Congressional and economic leaders worked late into the night Thursday to come up with a solution to America's financial crisis. The news gave stocks a big boost. But taxpayers may soon be paying the price.
The Bush administration is working feverishly with Congress to come up with a plan that would rescue banks from what some are calling the worst financial crisis since the Great Depression.
Paulson, who said he would work with Congress through the weekend, urged leaders to enact something large enough to have the necessary impact, while protecting taxpayers as much as possible.
Details of the plan are still being hammered out. It's believed to involve the creation of a government agency that would buy up all the bad loans that are strangling America's financial institutions. The agency would reportedly be patterned after one created during the 1980's to solve the savings and loan crisis.
"This country is able to come together and do things quickly when it needs to be done for the good of the American people," Paulson said.
Global markets Rebound
Wall Street and foreign markets rebounded big-time as word spread that government help may be on the way. The Dow jumped 410 points -- it's biggest percentage increase in six years.
"This is innovative monetary policy and it's something the market was willing to celebrate," said Art Hogan, chief market strategist with Jefferies & Co.
But taxpayers may not be in a festive mood. The government has already bailed out several leading banks to the tune of more than $600 billion over the past year. And there's been no word on how much the rescue plan being discussed on Capitol Hill might cost.
The Security and Exchange Commission is also chipping in to help right the financial ship. The group has announced a temporary ban on short selling. It's a common practice on Wall Street.