Coordinated international action helped avert even worse consequences from the financial crisis that erupted last year, former President George W Bush said on Wednesday.
"We intervened early, we intervened aggressively and we intervened together," Bush told the World Knowledge Forum, an annual conference sponsored by a South Korean business newspaper. "I believe because of close coordination and the willingness to act in the face of financial danger that the interjection of capital into the financial system helped save our economies," he said.
Bush served as US president from 2001-2009. In September 2008, just months before the end of his second term, the collapse of US investment bank Lehman Brothers Holdings Inc sent panic through the financial system. The US took unprecedented steps, including a massive stimulus package to prop up consumer spending and the injection of huge amounts of public funds to bail out banks and the auto industry. "I think they were necessary to avoid financial collapse," Bush said of the measures. "And I hope over time that government gets out of the ownership position in those vital industries."
Bush was heavily criticized over his handling of the crisis and for government policies that were seen as lax in regulation and overly favorable to Wall Street in areas such as credit default swaps and other derivatives, a major trigger of the turmoil. Governments elsewhere, including in Britain, China, Japan and South Korea, also took actions to boost their economies. The coordinated efforts have been largely credited with helping stabilize the world economy. The crisis also led to a reordering of the global financial system and raised the profile of the Group of 20 nations, which has emerged as the key global economic coordinator.
Bush said that though the actions were necessary, they were hard to take.
"I fully recognize some of the decisions for the leaders were difficult," he said. "They were for me. Some of my decisions ran counter to my philosophy that said people ought to bear responsibility for the financial decisions they make." The actions taken were a result of lessons learned from the past, including "lessons from the Great Depression," Bush said. Fears that last year's financial meltdown and ensuing slowdown would turn into a repeat of the Great Depression, the economic collapse that spread around the world during the 1930s, were pervasive in the wake of Lehman's collapse.
Nobel Prize-winning economist Paul Krugman, speaking at the same event, said that actions including aggressive interest rate cuts, financial sector rescues and interventions and asset purchases by central banks were important factors in helping avert depression. "We have avoided the plunge into total catastrophe," he said.