U.S. President George W. Bush said Monday that the first step to economic recovery is to safeguard the nation's financial system, defending his administration's decision to rescue Citigroup.
The decision to rescue Citigroup is necessary to safeguard the financial system and help the economy recover, he argued.
In a statement on Monday, Bush said that he approved the action, recommended by U.S. Treasury Secretary Henry Paulson, while flying back to Washington on Sunday evening from meetings in Peru with Pacific Rim leaders.
"I talked at length to the secretary about his recommendation," the president said. "The decision was made to safeguard Citigroup. "
He talked to President-elect Barack Obama about the decision.
Referring to the Citigroup rescue, Bush said: "We have made these kind of decisions in the past. We made one last night. And if need be we will make these kind of decisions to safeguard our financial system in the future."
Bush also said that Paulson is working closely with Obama's transition team.
"It's important for the American people to know that there is close cooperation," he said. "It's important for the American people to know that we will safeguard the financial system as the first step necessary for financial or for economic recovery."
After intense discussions at the past weekend, the U.S. government agreed to shoulder hundreds of billions of dollars in possible losses at Citigroup and to plow a fresh 20 billion dollars into the troubled company.
The failure of Citigroup, the nation's second largest commercial bank, would have seized up still-fragile lending markets and caused untold losses among institutions holding debt and financial products backed by the company, according to analysts.
It is too big to be allowed to fail, they believe.