Archive for Friday, September 14, 2001

Global economy gets lift from Fed

Bush administration urges confidence in banking system

September 14, 2001


— The Federal Reserve announced Thursday that $50 billion would be made available to European banks to help them meet emergency withdrawal needs, while the Bush administration proclaimed prospects remained bright for an economic rebound.

Trying to bolster confidence in the wake of the worst terrorist attacks in U.S. history, Treasury Secretary Paul O'Neill insisted that the adverse economic impact likely would be short-lived as transportation gets back to normal with the resumption of airline flights.

"We have every reason to maintain our confidence in the U.S. economy," O'Neill said. "The prospects for a rebound in the U.S. economy remain unchanged."

O'Neill expressed satisfaction with how the banking system had been operating after Tuesday's attacks and with the resumption of trading in Treasury bonds Thursday, which he called "an important step on the way back to full market operations."

In an effort to prevent the attacks from derailing the global economy, the Fed said it would make up to $50 billion available to European banks that have subsidiaries in the United States. Dollars will be exchanged for euros, the new currency for 12 European countries.

While officials announced that the stock markets would remain closed until Monday, they insisted that their monitoring of operations at U.S. banks and the global financial system showed few problems following the terrorist attacks at the World Trade Center in New York.

"We've suffered, as you know, quite a blow, but I think the financial systems have proven themselves quite resilient," Treasury Vice Chairman Roger Ferguson said.

He said that the financial systems had been functioning better than expected under the circumstances.

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