Bush says he's working hard on economic turmoil

WASHINGTON - September 18, 2008 - Rep. Barney Frank, D-Mass., said the administration officials sought legislation giving the government broad power to buy up bad debt from distressed financial institutions. He said there was "virtually unanimous agreement" among those at the meeting that such legislation was needed.

Bush was supposed to spend the day in Alabama and Florida raising money for Republicans and talking energy policy. He canceled his trip and sent Vice President Dick Cheney to sub for him at the fundraisers to focus on the worst financial meltdown since the Great Depression.

"The American people are concerned about the situation in our financial markets and our economy," Bush said after his meeting with Treasury Secretary Henry Paulson, Fed Chairman Ben Bernanke and Christopher Cox, chairman of the Securities and Exchange Commission. "And I share their concerns."

The tumult in financial markets and the disappearance of corporate giants have shaken people's faith in the economy. On Wall Street, the fear is that more significant financial companies will fall, causing a spillover effect within the United States and on world markets.

In brief formal remarks outside the Oval Office, Bush sought to show that the administration is moving swiftly and aggressively by taking "extraordinary measures."

Earlier this month, the administration took over mortgage giants Fannie Mae and Freddie Mac. At the start of this week, the Federal Reserve rescued American International Group Inc., an insurance giant, from bankruptcy by granting an emergency $85 billion loan that gives the government an 80 percent stake in the company.

On Wednesday, the Securities and Exchange Commission tightened rules on short selling, the practice of betting that a stock will fall.

And Thursday, the Federal Reserve pumped $55 billion in temporary reserves into the markets after coordinated action with the central banks of other nations.

The White House says the moves will help protect the broader economy and therefore everyday life. But the president used language that resonates more with market analysts than the public. He promised that the "markets are adjusting" - a term suggesting the White House hopes that a temporary correction is under way, not a sustained slide.

"The American people can be sure we will continue to act to strengthen and stabilize our financial markets and improve investor confidence," the president said.

Bush did not specify what those steps might be. White House press secretary Dana Perino said she could not comment on them, either. "That's something I'm not at liberty to talk about," she said.

The White House gave little detail of how Bush spent the day, other than the Paulson meeting and staying in regular touch with other economic advisers.

What the president called "serious challenges" facing the markets placed the White House in crisis mode.

But Bush has behaved very differently than in previous crises, such as around the start of the Iraq war, after Hurricane Katrina hit in 2005 or after last month's invasion by Russia of tiny neighbor Georgia. In those cases, Bush would talk nearly every day. This week, he has kept a lower profile.

His remarks Thursday were his first since Monday. And he has spurned every attempt by reporters to ask questions about the developments, including again on Thursday. As he finished his very brief statement and turned to walk back into the Oval Office, a reporter asked if he believed the economy was still sound. The president kept walking.

Despite the government's extensive actions, Lehman Brothers, the country's fourth-largest investment bank, filed for bankruptcy protection this week. A weakened Merrill Lynch, deciding it couldn't go it alone anymore, found help in the arms of Bank of America.

A private business group reported Thursday that the economy's health deteriorated for the second consecutive month in August as building permits dropped and unemployment claims rose. Oil prices are rising again as investors eye U.S. financial turmoil. Employers are cutting payrolls. New applications for unemployment benefits are up, partly due to Hurricane Gustav. The housing market remains unstable.

Amid the bad news, lawmakers from both parties are becoming increasingly vocal about their concerns with the information they're getting from the administration.

Administration officials refused to attend a closed-door briefing with House Republicans Thursday morning, said Rep. John A. Boehner of Ohio, the House GOP leader. "Members of Congress have a responsibility to their constituents and to the American taxpayers to have a better understanding of what's happening," Boehner said.

Sen. Chris Dodd, D-Conn., the Banking Committee chairman, was similarly peeved when Paulson twice canceled appearances he was to have made before the panel this week. Senators will have to wait until Tuesday to hear from the Treasury secretary and Bernanke.

"The Treasury Department tried as hard as they could to get information up to members of Congress as quickly as possible, but, granted, more and better and earlier communication between us is always a better thing," said Perino.

Click here to get the latest Philadelphia news and headlines from across the Delaware and Lehigh valleys.

Copyright © 2023 WPVI-TV. All Rights Reserved.