And so when our housing bubble burst, our banking system took a huge hit, and our credit markets froze up. And until we start lending again, it’s going to be very difficult for the U.S. economy to get the lift it needs, and by extension, very difficult for us to provide the lift that the international economy is looking for us to provide.
So when there’s no lending, creditworthy families can’t afford to buy homes or cars. I’m talking about creditworthy families. I’m not talking about families who, for good or bad reason, are not creditworthy, but when creditworthy enterprises are not able to move, the whole system begins to implode and turn in on itself.
So our financial rescue plan takes some of the following steps to address this. A, it gives private investors the incentive to partner with the government to clear bad assets off the balance sheets of these banks. It also floods the credit market with liquidity, hundreds of billions of dollars from our Treasury and Federal Reserve Bank to loosen up credit lines. Thirdly, it recapitalizes our banking system, strengthening the balance sheets with direct capital injections. And finally, and perhaps the most important step, is to introduce a set of financial market regulations that will prevent excessive speculation, under-regulated processes that got us in this mess in the first place. And we’re actively rolling out these ideas, and will do so in advance of the G20.
The third element of our plan is housing. The housing bubble that inflated over the last decade burst in 2007, and may ultimately mean a loss of $6 to $8 trillion in housing wealth in our country. And to address this part of the fallout, our housing plan works with mortgage lenders to help homeowners refinance to cheaper loans. That’s why we reduced interest rates so dramatically. It avoids foreclosure to those with high debt-to-income ratios by modifying the terms of their loans. And we believe these plans are going to help a minimum of 9 million homeowners in the United States stay in their homes.
And the fourth and final piece of our — and I want to make it clear now, I hope this does not come off as proscriptive, that we think we’re doing all this right and, therefore, why doesnâ€™t everybody else do the same thing. We do believe this is what is necessary to get the engine going again in the States.
The fourth and final component of our economic budget and — is the second most difficult part of our agenda, and that is that we set out a budget — (inaudible) — roundly criticized by the opposition, and that’s legitimate for them to do, but also, some skeptics in our own — among our own friends, in our own parties.
(Audience participant speaks.)
VICE PRESIDENT BIDEN: Whatever you said, yes. (Laughter.) I just like the way you said it. (Laughter.) No, they always criticize. I like the way you say it, though. (Laughter.)