Bush Says He's Prepared To Reassure Markets

President Bush addresses reporters at a news conference Tuesday at the White House. i i

President Bush addresses reporters at a news conference Tuesday at the White House. Tim Sloan/AFP/Getty Images hide caption

itoggle caption Tim Sloan/AFP/Getty Images
President Bush addresses reporters at a news conference Tuesday at the White House.

President Bush addresses reporters at a news conference Tuesday at the White House.

Tim Sloan/AFP/Getty Images

Seeking to restore confidence in the nation's ailing economy and financial sector, President George Bush acknowledged Tuesday it is a "tough time" for many Americans, but said his administration was prepared to do whatever is necessary to reassure the markets.

"I think the system is basically sound, I truly do," the president said, speaking to reporters at the White House press briefing room, adding that he realized "there's a lot of nervousness."

Amid soaring gas prices, the most depressed real estate market in decades, falling home prices and tight credit, Bush defended his administration's efforts to stabilize the economy.

He lent his support to a plan to prevent the publicly traded, government-sponsored Freddie Mac and Fannie Mae from collapsing under the weight of their bad loans.

The bailout would allow the Federal Reserve to extend a line of credit to the troubled lenders, which between them hold or guarantee $5 trillion worth of U.S. home mortgages.

"I don't think most Americans realize how important Freddie Mac and Fannie Mae are," Bush said. "We must ensure they can continue providing access to mortgage finance."

The president's news conference came as Federal Reserve Chairman Ben Bernanke appeared before the Senate Banking Committee to explain the Freddie and Fannie plan.

Bush repeatedly referred to the Fed measures as temporary. He also signaled that there was no immediate plan for a government takeover of Freddie and Fannie, saying the administration would "work to ensure they remain shareholder-owned companies."

Asked whether the government might try a similar rescue for other troubled firms, Bush said, "I don't think the government ought to be involved in bailing out companies."

Many critics, however, have argued that the rescue plan effectively forces taxpayers to cover shareholders' losses.

The president also took the opportunity to bash lawmakers for not moving more quickly to open up offshore drilling to bring down high fuel prices. Earlier this week, Bush lifted an executive ban on drilling that was put in place while his father was president.

"The only thing standing between the American people and these vast reserves is action from Congress," he said. He later added that people should conserve and "be wise" about how they use gas and energy.

Bush admitted that tapping fresh domestic reserves would have little or no immediate effect on the price of gasoline at the pump.

"I readily concede it won't produce a barrel of oil tomorrow, but it will reverse the psychology," he said.

Bush Offers Assurances On Economy, Energy Costs

In a White House news conference Tuesday, President Bush tried to reassure Americans that the financial system is sound. He's urging Congress to pass laws to make it possible to shore up government-sponsored mortgage giants Fannie Mae and Freddie Mac. He also spoke about oil drilling and the wars in Iraq and Afghanistan.

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DEBORAH AMOS, host:

This is MORNING EDITION from NPR News. I'm Deborah Amos.

STEVE INSKEEP, host:

And I'm Steve Inskeep. Good morning.

President Bush is trying again to reassure Americans about their financial institutions. Even as shares on Wall Street were sliding today, the president had these words at a White House news conference.

President GEORGE W. BUSH: I think the system basically is sound, I truly do. And I understand there's a lot of nervousness, and - but the economy's growing, productivity is high, trade's up, people are working. It's not as good as we'd like, but - and to the extent that we find weakness, we'll move. That's one thing about this administration. We're not afraid of making tough decisions.

INSKEEP: Administration leaders did move over the weekend, coming up with a plan to shore up Fannie Mae and Freddie Mac, the two major mortgage firms, and now the president is urging Congress to pass laws to make that shoring up possible.

We're going to talk more about this this morning with NPR Washington editor Ron Elving. Ron, good morning.

RON ELVING: Good morning, Steve.

INSKEEP: We heard the president saying what he often says: Look, the basics are okay here. Did he say anything new to reassure people?

ELVING: Anything new? No. This was not his purpose today. He did not bring out any new purpose - any new proposals, any new ideas. What he wanted to do was reinforce his support for Secretary Paulson's proposals over the weekend...

INSKEEP: Treasury secretary, sure.

ELVING: Show the market that we're all behind the secretary. And also reemphasize that while they're going to save Freddie and Fannie, Fannie Mae and Freddie Mac, the two big mortgage institutions that are wobbly in the last couple of weeks, we are not going to bail them out, in his words. We're going to leave them shareholder-owned companies. That was what he was emphasizing. That's not new.

INSKEEP: Well, what did he have to say about another development of the last few days. There was a major bank that people were rushing to withdraw money from. The government had to step in.

ELVING: What he had to say here was the basic insurance principle of the federal government, which is that the Federal Deposit Insurance Company - Corporation - will guarantee your deposits up to $100,000. So if you have less than $100,000 in an account in your bank, that is guaranteed by the federal government, don't worry, don't make a run on the banks, you don't have anything to worry about. And that was the essential message he wanted to extend.

INSKEEP: Although I suppose if you're president you have to wonder. You keep saying this and stocks keep slipping a little more and a little more and a little more.

ELVING: There are all kinds of reasons why the financial markets are going to react one way and another to the news, among other things, of how the financial markets did overnight in Asia and now today in Europe. So they have many cues.

But the president wants to emphasize to the average American that there's no necessity to run down to the bank and line up to try to get out their savings account.

INSKEEP: One part of all this concern, of course, is the high cost of energy, in particular oil and gasoline. The president has been opening more - opening more land to drilling. What is saying about that today?

ELVING: He is saying that the executive order, which was actually signed by his own father, the first President Bush, has now been lifted. So it is possible now, as far as the executive part of the government is concerned, to go out and drill on the outer continental shelf. And he says the technology's there now to do that without harming the environment. So he wants to do that. So he wants to do that. Congress of course has never changed its own legislative ban on such drilling, which has been very popular ever since it was put in place but which is less popular now that people are so concerned about oil supplies and therefore gas prices, or gas prices and therefore oil supplies.

INSKEEP: Did the president answer criticisms that a few more leases one way or the other isn't really going to affect the price of oil any time soon?

ELVING: He did address the idea that it would take many years before it would actually have this effect. He said the psychology of the market would be that if the United States started pushing out the restraints on its own supply of oil, that would affect the market psychology and bring down the price of oil.

INSKEEP: Ron, what did the president say about something that a couple of years ago seemed to be the only subject on anybody's minds - the wars, Iraq, Afghanistan?

ELVING: Well, let's listen to a little bit of what he had to say about the comparison between how things are going in Iraq right now and Afghanistan.

Pres. BUSH: One front right now is going better than the other, and that's Iraq, where we're succeeding and our troops are coming home based upon success. And Afghanistan's a tough fight.

ELVING: Indeed it is. And that is going to be the subject today of a speech by Barack Obama and of another speech by John McCain, his opponent, and they're both talking about our foreign policy and they're talking particularly about these two wars.

INSKEEP: Ron, thanks very much.

ELVING: Thank you, Steve.

INSKEEP: That's NPR Washington editor Ron Elving bringing us up to date on a presidential news conference this morning. The president addressed a number of subjects, one of which was the economy and an effort to shore up a couple of major lending institutions, mortgage institutions, and the president tried to reassure voters, taxpayers, residents, people in the economy, that, quote, "the system is basically is sound."

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