President George W. Bush said Friday that the U.S. government's financial rescue plan was aggressive enough and big enough to work, but would take time to fully kick in.
"We are a prosperous nation with immense resources and a wide range of tools at our disposal ... We can solve this crisis and we will," Bush said in brief remarks from the White House Rose Garden.
Bush spoke as leaders of the world's leading economies gathered in Washington amid frozen credit markets, panic selling in stock markets and a looming global recession.
Bush noted that major Western economies were working together in an attempt to stabilize markets and end the spreading panic.
"Through these efforts, the world is sending an unmistakable signal. We're in this together and we'll come through this together," Bush said.
Finance ministers and central bankers from the Group of Seven — the United States, Japan, Britain, Germany, France Italy and Canada — were here for a weekend meeting. Bush plans to meet with the leaders on Saturday.
Bush said he understood how Americans could be concerned about their economic future, "that anxiety can feed anxiety and that can make it hard to see all that's being done to solve the problem."
Bush said the new $700 billion rescue plan that he signed into law a week ago authorizes the Treasury Department to use a "variety of measures to help banks rebuild capital" including "purchasing equity of financial institutions."
It was the first time the president has mentioned suggestions that the U.S. government buy shares of banks, although it has been mentioned by other administration officials.
Bush also noted that the Federal Reserve has injected hundreds of billions into the system and with other central banks has made interest-rate cuts that should help thaw frozen credit markets and enable loans to flow again.
U.S. government insurance on bank and credit union deposit accounts has been raised to $250,000 and the Treasury is offering insurance for the first time for money-market funds, he added.
"The federal government has a comprehensive strategy and the tools necessary to address the challenges in our economy," Bush said.
He sought to reassure Americans that the U.S. government is doing all it can to cope with the problem. He acknowledged mounting worry among people about their retirement and investment accounts.
Bush said that the administration had launched initiatives that "have helped more than 2 million Americans stay in their homes."
He also noted "rigorous enforcement" steps taken by the Securities and Exchange Commission to make sure that some investors don't "take advantage of the crisis to illegally manipulate the stock market."
Stock market volatility continued, with the Dow Jones industrials falling nearly 700 points soon after trading began, regaining all of that deficit to show an advance and then turning lower again.
Working group aims to avoid past mistakes
Bush's top advisers on financial markets are pledging to continue working to correct the mistakes that have led to more than a year of severe market turmoil.
The President's Working Group on Financial Markets, which includes Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, issued a report Friday that said while many reforms have been implemented, more needs to be done.
Paulson says the group has been working to reduce the likelihood that past mistakes will be repeated.
"This progress report demonstrates that as we work to address the immediate issues at hand, we also have been working to reduce the likelihood that mistakes of the past will be repeated," Paulson said in a statement.
The 28-page report was a follow-up to the initial version the working group issued in March that reviewed the Bush administration's initial response to a severe credit crisis which struck markets in August 2007. That crisis, which originated in subprime mortgage lending, has grown more virulent in recent days and proved resistant to repeated efforts by the administration and the Federal Reserve to deal with the problems.
Market turbulence has increased this week with the Dow Jones industrial average suffering a series of huge declines that have wiped out $8.7 trillion in wealth over the past year.
The president's working group, which was created after the 1987 stock market crash, serves as crisis managers for the government during periods of extreme market turmoil.
The new report said that significant progress had been made in such areas as reforming the process for originating home loans, and in strengthening financial institutions' risk management practices.
Paulson said the new report would serve as the basis for discussions with international finance ministers. Paulson and Bernanke will serve as hosts for a meeting of finance ministers and central bank presidents from the Group of Seven major industrial countries on Friday.
Bush will meet with the group on Saturday, a discussion that was added this week as turmoil in the financial markets intensified.