Bush says "unprecedented action" being taken to deal with financial crisis

U.S. President George W. Bush makes a statement on the economy from the White House in Washington September 18, 2008.

WASHINGTON, Sept. 19 (Xinhua) -- U.S. President George W. Bush said Friday his administration is taking "unprecedented action" to deal with the ailing financial markets.

"America's economy is facing unprecedented challenges," Bush said in a Rose Garden statement. "We're responding with unprecedented measures."

The president said that a financial contagion that began with sub-prime home mortgages has spread throughout the financial system and led to an erosion of confidence.

That has frozen many financial transactions including those to ordinary consumers and small businesses, said the U.S. president.

He said 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.

"We must act now to protect our nation's health from serious risk," he said.

It is the third time this week that Bush has spoken on the financial crisis in an effort to calm jittery consumers and markets.

The president's statement came shortly after U.S. Treasury Secretary Henry Paulson told a news conference that the government must now take "further, decisive action" to take troubled assets off financial organizations' balance sheet, saying the bad debt is "the root cause of our financial system's stresses."

"As illiquid mortgage assets block the system, the clogging of our financial markets has the potential to have significant effects on our financial system and our economy," Paulson said.

The secretary wants to work through the weekend with congressional leaders to reach agreement on a plan that would address the root problems of the financial crisis gripping the country.

Earlier, Bush authorized the Treasury Department to tap up to 50 billion dollars from a Depression-era fund to insure the holdings of eligible money market mutual funds.

The Federal Reserve also announced it will expand its emergency lending program to help support the 2 trillion dollars in assets of the funds.