U.S. Treasury Secretary Henry Paulson expressed his reservations Tuesday to use the 700 billion dollar rescue package to help struggling auto makers.
"We needed the financial rescue package so we could intervene, stabilize our financial system, and minimize further damage to our economy," Paulson told a hearing of the House Financial Services Committee.
|Treasury Secretary Henry Paulson testifies during a hearing before the House Financial Services Committee in a hearing on "Oversight of Implementation of the Emergency Economic Stabilization Act of 2008 and Government Lending and Insurance Facilities; Impact on Economy and Credit Availability" on Capitol Hill in Washington November 18, 2008. [Xinhua/Reuters Photo]|
"The rescue package was not intended to be an economic stimulus or an economic recovery package; it was intended to shore up the foundation of our economy by stabilizing the financial system," said the Treasury chief.
"And it is unrealistic to expect it to reverse the damage that had already been inflicted by the severity of the crisis," he added.
|U.S. Treasury Secretary Henry Paulson (L) and Federal Reserve Chairman Ben Bernanke (C) and Federal Deposit Insurance Corporation Chairman Sheila Bair testify at the House Financial Services Committee hearing on Capitol Hill in Washington November 18, 2008. [Xinhua/Reuters Photo]|
The president-elect Barak Obama and the Congress has been pressuring the Bush administration to use some of the financial rescue package to bailout the auto companies.
"Our industry ... needs a bridge to span the financial chasm that has opened up before us," General Motors CEO Rick Wagoner also told the Senate Banking Committee in prepared testimony on Tuesday.
Failure of the auto industry "would be catastrophic," he warned, resulting in three million jobs lost within the first year and "economic devastation (that) would far exceed the government support that our industry needs to weather the current crisis."
But Paulson said that while it would not be a good thing to let an automaker fail, the 700 billion dollar fund should not be used to prevent such a failure.
"I don't see this as the purpose" of the bailout program, which is intended to stabilize jittery financial markets and get lending flowing more freely again, which eventually should help revive the ailing economy, said the Treasury chief.
(Xinhua News Agency November 19, 2008)