On Bush Administration's Plan to Recapitalize Nation's Financial Institutions

The coordinated actions announced today by the Treasury Department, the Federal Deposit Insurance Corporation, and the Federal Reserve are steps in the right direction that could help to restore confidence in our financial markets and the routine flow of credit to our financial system that is essential for small businesses and consumers.

From the first days of negotiations on the Emergency Economic Stabilization Act, Congress demonstrated bipartisan support for direct injections of capital into troubled financial institutions, even though the Administration’s preferred approach was primarily to purchase troubled assets. The decision of President Bush and Secretary Paulson to take the critical step of direct purchases of preferred stock in financial institutions will, if conducted correctly, protect the interests of taxpayers. I also welcome the executive compensation restrictions, including a prohibition on golden parachutes, which are required of financial institutions that participate in the program.

I have directed several congressional committees to review the actions taken by the Administration to ensure that the interests of the American people are protected.

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