Amid the turmoil in the financial markets, President Bush makes a statement outside the Oval Office of the White House in Washington, Thursday, Sept. 18, 2008, about the economy and government efforts to remedy the crisis. The president canceled a planned trip to the South today so he could meet with his economic advisers instead. (AP Photo/J. Scott Applewhite)
WASHINGTON (AP) -- President Bush said Friday that federal intervention in financial markets was not only warranted but "it is essential" to halt the worst financial crisis in decades.
"America's economy is facing unprecedented challenges. We're responding with unprecedented measures," Bush declared, standing in the White House Rose Garden with Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and Christopher Cox, chairman of the Securities and Exchange Commission.
"This is a pivotal moment for America's economy," Bush said. He said that a financial contagion that began with low-quality home mortgages had "spread throughout our financial system" and "led to an erosion of confidence that has frozen many financial transactions," including those of countless consumers and small businesses.
"We must act now to protect our nation's health from serious risk," he said.
He said steps being envisioned by the administration - which Paulson said earlier Friday could entail "hundreds of billions" of dollars - were not without risk.
"Significant amounts of taxpayer dollars are on the line," Bush said. Even so, he added, "We expect this money will eventually be paid back."
It was the third time this week that Bush had spoken on the financial crisis in an effort to calm jittery consumers and markets.
He pledged to work with the Democratic-controlled Congress on a systemwide proposal to improve the health of U.S. financial institutions.
He spoke after the administration said it would safeguard assets in money market mutual funds and temporarily banned short-selling of financial company stocks, a trading technique that bets on stocks declining in value. The Treasury Department has asked Congress to give it sweeping power to buy up toxic debt that has unhinged Wall Street.
Bush also has authorized Treasury to tap up to $50 billion from a Depression-era fund to insure the holdings of eligible money market mutual funds. And the Federal Reserve announced it will expand its emergency lending program to help support the $2 trillion in assets of the funds.
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