Bush: Economy facing 'challenging times'

WASHINGTON (AP) -- President Bush, trying to calm turmoil in financial markets, said Monday that his administration is "on top of the situation" in dealing with the slumping economy.

"One thing is for certain, we're in challenging times," the president said after meeting with Treasury Secretary Henry Paulson and other senior economic advisers. "But another thing is for certain: We've taken strong, decisive action."

The president commended the Federal Reserve for its urgent actions over the weekend. He praised Paulson for working with the Fed and showing "the country and the world that the United States is on top of the situation."

Bush spoke on a day of turmoil and plunging prices on global financial markets. Oil prices hit a record in Asian trading, U.S. stock index futures fell sharply and the dollar hit record lows.

The White House moved quickly to raise Bush's public profile Monday, and he continued to send an upbeat message, even in acknowledging a downturn that keeps roiling the economy and the country's people as well. Watch Paulson's take on the economy »

Bush said "our financial institutions are strong" and "our capital markets are functioning efficiently and effectively."

Still, Bush said his administration is monitoring economic developments closely. Watch more of Bush's comments on the economy »

"When need be, we'll act decisively in a way that continues to bring order to financial markets," Bush said.

He did not indicate any other steps his government might take, or when.

"In the long run, our economy is going to be fine," Bush said. "Right now we're dealing with a difficult situation."

The Federal Reserve, in an extraordinarily rare weekend move, became a lender of last resort for Wall Street investment houses to begin securing short-term emergency loans.

The central bank also approved a cut in its emergency lending rate to financial institutions to 3.25 percent from 3.5 percent.

White House press secretary Dana Perino said later that Bush had been kept informed of the Fed's intended actions through a variety of people, but that he was not personally involved in making or approving the decision.

She defended the dramatic intervention on behalf of the financial markets as necessary, even as Bush himself warned only on Friday against excessive government intervention in the housing markets. "The concern about possible future market disruptions is real, and a concern not only just to the president but also to world markets," Perino said.

She also said the administration was taking action to help individual homeowners suffering from higher mortgage defaults, and that there is "a responsibility on the part of the media to really explain" that assistance.

Later Monday, Bush met with his Working Group on Financial Markets, which includes Paulson, Federal Reserve Chairman Ben Bernanke and Securities and Exchange Commission Chairman Christopher Cox.

Afterward, Paulson rejected the notion that the government had bailed out Bear Stearns with a $30 billion line of credit for a takeover by JPMorgan Chase.

"If you would ask the Bear Stears shareholder in what has happened in terms of their value, I don't think any of them would think this is a good outcome for them," Paulson told reporters in the White House driveway.

"This was an easy decision," he said. "It was the right outcome." E-mail to a friend

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