LAWFUEL – The Legal Newswire – President George W. Bush on Friday tried to calm financial market turmoil from the credit crisis by announcing proposals intended to prevent homeowners from defaulting on risky mortgages.
Reuters report that rising U.S. defaults on so-called subprime mortgages to less credit-worthy borrowers have caused volatility in financial markets around the world and raised concerns that the U.S. economy could fall into recession.
In trying to soothe those worries, Bush said the U.S. economy was healthy enough to weather the credit crisis and that the subprime market problems represented only a “modest” part of the economy.
“The recent disturbances in the subprime mortgage industry are modest, they’re modest in relation to the size of our economy,” he said.
But he emphasized that it was not the federal government’s job to bail out the mortgage lending industry, a comment that caused U.S. stock prices to pare gains.
“The government’s got a role to play. But it is limited. A federal bailout of lenders would only encourage a recurrence of the problem,” Bush said in a statement in the Rose Garden.