US Tax Payers To Bail
Out Foreign Banks
Paulson: Foreign Banks can use U.S. Rescue Plan
By Mark Felsenthal
WASHINGTON (Reuters) - Treasury Secretary Henry Paulson said
Sunday that foreign banks will be able to unload bad financial
assets under a $700 billion U.S. proposal aimed at restoring
order during a devastating financial crisis.
"Yes, and they should. Because ... if a financial institution
has business operations in the United States, hires people in
the United States, if they are clogged with illiquid assets,
they have the same impact on the American people as any other
institution," Paulson said on ABC television's "This Week with
Paulson was appearing on the Sunday television talk show circuit
to provide details about the U.S. government plan for a sweeping
bailout to mop up hundreds of billions of dollars in toxic
The moves capped a week in which financial markets faced their
most serious confluence of crises since the Great Depression in
the 1930s and threatened national economies and the worldwide
Paulson defended the rescue package as painful and costly, but
necessary to stabilize a financial system that has all but
ground to a halt.
"The situation we had, where the markets are frozen and lending
may not be available, is one that won't be good for the American
people," he said.
"The fact that the taxpayer is in this position is painful to
Paulson acknowledged that an emergency rescue plan aimed at
stabilizing a financial system in freefall will cost taxpayers
money, but argued that costs will not be as high the $700
billion limit of the package.
"The taxpayer is at risk," he said on "Fox News Sunday"
television program, but added, "It would be extraordinary
circumstances, highly unlikely, that the cost will be anything
like the amount you spend for the assets."
Paulson said the U.S. government is pressuring financial
authorities in other countries to adopt similar financial
"We have a global financial system and we are talking very
aggressively with other countries around the world, and
encouraging them to do similar things, and I believe a number of
them will," he said.
Paulson said the sudden crisis was stunning but he expressed
hope in U.S. economic resilience.
"I wouldn't bet against the long-term fundamentals of this
country," he said on NBC's "Meet the Press." "But this is a
humbling experience to see so much fragility in our capital
markets, and ask how did we ever get here."
"I'm confident Congress will move and move quickly," Paulson he
(Additional reporting by Thomas Ferraro)
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