US government role needed to ease crisis: George Bush

WASHINGTON: President George W Bush said Friday that U.S. government intervention in financial markets is not only warranted but ``it is essential'' to calm nervous consumers and to halt the worst financial crisis in decades.

``America's economy is facing unprecedented challenges. We're responding with unprecedented measures,'' Bush said in a Rose Garden statement. Standing alongside were 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 sub-prime home mortgages has ``spread throughout our financial system'' and ``led to an erosion of confidencer that has frozen many financial transactions,'' including ones to ordinary 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 _ was not without risk.

``Signifcant 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 has spoken on the financial crisis in an effort to calm jittery consumers and markets.

He pledged to work in a bipartisan way 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.