Bush: Economy to survive market woes

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By Jon Ward

President Bush acknowledged Monday that current "adjustments" in the U.S. markets are "painful," but said he had faith that the economy will be able to survive self-correction without catastrophe.

"I know Americans are concerned about the adjustments that are taking place in the financial markets," Mr. Bush said, referring to the bankruptcy filing by Lehman Brothers earlier Monday, and to the broader market instabilities caused by the ongoing failure of mortgage securities.

Mr. Bush addressed the economic turbulence at a joint statement in the Rose Garden with Ghanaian President John Kufuor.

"The White House and throughout my administration, we're focused. We're working to reduce disruptions and minimize the impact of these financial market developments on the broader economy," Mr. Bush said.

But for the first time in this current financial crisis, the Bush administration has chosen not to help a firm in crisis, refusing over the weekend to lend federal funds to help save Lehman Brothers.

The government in March loaned $30 billion to help JP Morgan Chase buy the struggling investment bank, Bear Stearns, and last week initiated a change in management at Fannie Mae and Freddie Mac, which hold about half of the nation's $12 trillion in mortgages.

Mr. Bush gave a nod to this change in tactics, which is intended to allow the market to self-correct.

"In the short run adjustments in the financial markets can be painful, both for people concerned about their investments, and for the employees of the affected firms," he said. "Over the long run, I'm confident that our capital markets are flexible and resilient, and can deal with these adjustments."