Wall Street stepped back from the brink of despair today as the Dow Jones Industrials closed up 410 points at closing.
The bounce back followed a report that the federal government is considering creating an entity that will take over banks' bad debt.
The Dow climbed 560 points from its low of the day.
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The turning point was word that Treasury Secretary Henry Paulson may form an agency similar to the Resolution Trust Corp. that was set up during the savings and loan crisis of the late 1980s and early 1990s.
Tha news gave investors the hope they needed to pull the market back from a steady plunge after dropping over 500 points on Monday and nearly 450 on Wednesday on fears of global instability Lehman Brothers file bankrupcy, Merryl Lynch was sold off, and AIG needed a federal bailout.
The President said the billions injected into the economy by the federal government over the past few weeks was necessary to prevent a "severe disruption" in nation's market.
Bush said that in addition to the actions taken by the Federal Reserve, the Security and Exchange Commission had moved to "strengthen investor protections and step up its enforcement actions against illegal market manipulation."
Assuring Americans that the markets are adjusting to the "extraordinary measures" taken recently by the fed, Bush said he would "closely monitor" the situation.
Tthe U.S. Federal Reserve and other major central banks around the world have joined forces to inject as much as $180 billion into global money markets in an attempt to keep the credit crisis from worsening.
The big fear on Wall Street is that there are more significant financial companies to fall. Speculation is swirling about the futures of such major players as thrift bank Washington Mutual Inc. and investment bank Morgan Stanley. Media reports have been saying that Wells Fargo & Co. and Citigroup Inc. are interested in a possible takeover of Washington Mutual, and that Morgan Stanley and Wachovia Corp. are in talks about a possible combination.
Monday's 504-point loss in the Dow was its biggest drop since the drop following the September 2001 terror attacks. The blue-chip index is now about 24 percent below its Oct. 9, 2007, record of 14,164.53
Gold prices, another safe haven, rose further on Thursday, after posting their largest one-day price jump ever on Wednesday.
Oil is not considered as safe as gold but it, too, has been drawing investors who deem it safer than stocks. Light, sweet crude for October delivery on the New York Mercantile Exchange rose $0.72 to $97.88 a barrel, after rising by more than $6 a barrel on Wednesday.
The dollar fell against most other major currencies.
With less than five months left in his tenure, Bush has presided over two 400+ point drops in the Dow Jones and the bailout of several financial institutions that have left taxpayers on the hook for billions of dollars of risk and bailouts.