Treasury Under Secretary David McCormick, speaking at a investor's Forum in Hong Kong, said the seeds of the current crisis were sown many years ago and that the U.S. government is taking the appropriate measures to restore stability to the markets.
"The seeds of the significant challenges we face today were sown many years ago, beginning with a gradual weakening of lending practices by banks and financial institutions, and by greater willingness by borrowers to take out mortgages they couldn't afford," said McCormick.
McCormick outlined the government plan to stabilize markets by increasing liquidity in the markets, the $700 billion comprehensive program for removing these illiquid assets from the balance sheets of institutions and the Securities and Exchange Commission actions to prevent short-selling.
McCormick said the time to act is now as the U.S. government tries to restore financial stability.
"Policy-makers are implementing policies that address our short-term economic challenges and rebuild faith in the market," said McCormick. "When we emerge from this difficult period, our next task will be to strengthen the financial regulatory structure to forestall such excesses in the future."
By Steve Stecyk and edited by Stephen Huebl
©CEP News Ltd. 2008