After the worst week in Wall Street history, President Bush met with financial leaders in Washington for meetings of the World Bank and the International Monetary Fund. Afterward, he said he was confident the global economy would be stabilized.
"The leaders gathered in Washington this weekend are all working toward the same goals," he said. "We will stand together in addressing this threat to our prosperity. We will do what it takes to resolve this crisis, and the world's economy will emerge stronger as a result."
On Friday, the finance ministers and central bankers issued what Treasury Secretary Henry Paulson called a five-point "action plan." NPR's John Ydstie tells host Andrea Seabrook each country pledged to take the necessary steps to unfreeze credit, to stand behind its major financial institutions, to make sure the deposit insurance systems were robust, to take action to restart its mortgage markets and to ensure financial institutions were able to raise capital.
"There were no specifics yet today," Ydstie said. "That's going to be left to each country. And that was a disappointment, I think, for a lot of people."
At a news conference after the G-7 meeting, Paulson provided a few details of how the U.S. is gong to deal with boosting the capital of banks, Ydstie said. "He confirmed that the Treasury is working to come up with a standardized plan for the U.S. government to buy stock in banks using some of the $700 billion that Congress appropriated for the financial rescue."
Paulson said the government would buy shares like any other investor and suggested it would not become involved in the management of the banks. But, Ydstie said, details are yet to come.
The IMF's top policy-setting panel said it strongly supports the G-7 plan, which calls for the organization to take the lead in looking more in depth at what caused the financial meltdown.
IMF Chief Dominique Strauss-Kahn said the crisis is now affecting emerging markets, though not as much as the developed countries so far.
"But the IMF is forecasting a global slowdown in growth for next year, including in the emerging economies," Ydstie said. "That's not surprising, since they sell much of what they produce to the developed world, and the IMF says the developed world will be in recession through much of next year."