Treasury Secretary Henry Paulson warned that more financial companies would go bankrupt in the US despite Congress' decision to pump 700 billion dollars into money markets last week.
Treasury Secretary Henry Paulson warned Wednesday that more financial firms would go bankrupt in the United States and that recent market turmoil had "seriously impacted" the economy.
Paulson cautioned that a 700-billion-dollar government rescue package for the financial sector approved last week would not mean an end to backruptcies and that it would take several weeks to put in place.
"One thing we must recognize -- even with the new Treasury authorities, some financial institutions will fail," Paulson said at a news conference.
The aim of the rescue package is for the Treasury to buy up toxic debt being held by banks, but Paulson said it would be "several weeks before our first purchase."
The new law "doesn't exist to save every financial institution for its own sake," he added.
Reflecting the international scope of the crisis, Paulson also called for emerging market countries to be included in broad international talks on stabilizing the financial system.
Brazilian officials told AFP that a meeting of central bank chiefs and finance ministers from the G20 emerging and rich country group would take place in Washington on Saturday alongside a gathering of the G7 rich countries.
Paulson said a meeting of the Group of Seven afforded an opportunity to discuss "ways to further enhance our collective efforts."
In comments about the US economy, Paulson underlined that turmoil in the banking sector caused by declining house prices was already reducing growth in the non-finance economy.
"A chain of events caused by the ongoing housing correction has reverberated through US banks and financial institutions and has seriously impacted the underlying economy," he said.
Date created : 2008-10-09