Bush meeting with Paulson on economic crisis

Financial Crisis Posted on

President George W. Bush was meeting Monday with Treasury Secretary Henry Paulson on the economic crisis.

The president also was joining an already-scheduled meeting between members of his Cabinet who are working on economic cooperation with China, the White House said.

The developments are taking place following the government's agreement to shoulder hundreds of billions of dollars in possible losses at Citigroup and to plow a fresh $20 billion into the company.

A presidential statement was planned after the discussions.

A senior administration official said the participants in the morning discussions would focus on the economy, the financial crisis and actions regarding Citigroup.

In addition, they were to cover the president's weekend visit with leaders of Pacific Rim countries in Lima, Peru, where the global economic crisis was at the top of the agenda.

Analysts said a Citigroup failure would have seized up still fragile lending markets and caused untold losses among institutions holding debt and financial products backed by the company.

The bold move regarding Citigroup is the latest in a string of high-profile government bailout efforts. The Fed in March provided financial backing to JPMorgan Chase's buyout of ailing Bear Stearns.

Six months later, the government was forced to take over mortgage giants Fannie Mae and Freddie Mac and throw a financial lifeline — which was recently rejiggered — to insurer American International Group.

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