Paulson hails bold approach as the only way to recovery

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The Independent Online

Henry Paulson at yesterday's news conference:

"The underlying weakness in our financial system today is illiquid mortgage assets that have lost value as the housing correction has proceeded.

"The federal government must implement a programme to remove these illiquid assets that are weighing down our financial institutions and threatening our economy.

"The ultimate taxpayer protection will be the stability this troubled asset relief programme provides to our financial system, even as it will involve a significant investment of taxpayer dollars. I am convinced that this bold approach will cost American families far less than the alternative: a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion.

"I will spend the weekend working with members of Congress of both parties to examine approaches to alleviate the pressure of these bad loans in our system so credit can flow once again to American consumers and companies. Our economic health requires that we work together for prompt, bipartisan action.

"I look forward to working with Congress to pass necessary legislation to remove these troubled assets from our financial system. When we get through this difficult period – which we will – our next task must be to improve the financial regulatory structure so that these past excesses do not recur.

"This crisis demonstrates in vivid terms that our financial regulatory structure is suboptimal, duplicative and outdated. I have put forward my ideas for a modernised financial oversight structure that matches our modern economy and more closely links the regulatory structure to the reasons why we regulate."