Bush says U.S. will recover from financial crisis

WASHINGTON (Reuters) - U.S. President George W. Bush on Monday said the U.S. economy would recover from the current financial crisis and that the government stood ready to help the banking system as it did with the $20 billion capital injection into Citigroup.

Speaking to reporters after a meeting with Treasury Secretary Henry Paulson, Bush said the first step toward economic recovery is protecting the U.S. financial system.

"This is a tough situation for America, but we'll recover from it," Bush told reporters. "The first step to recovery is to safeguard our financial system."

The U.S. government late on Sunday announced the bailout of banking giant Citigroup. The government agreed to shoulder most of the potential losses on $306 billion of high-risk assets and inject $20 billion of new capital -- the biggest move yet to rescue a bank whose failure would have been catastrophic for the financial system.

Bush said he had spoken to Paulson, who stood next to him, about the Citigroup rescue plan Sunday night on the way back from the Asia-Pacific summit in Peru.

"We have made these kinds of decision in the past, made one last night, and if need be we're going to make these kinds of decisions to safeguard our financial system in the future," Bush said.

Bush said he also spoke with President-elect Barack Obama about the Citigroup rescue and promised to inform the incoming president and his economic team of any future major decisions.

"Secretary Paulson worked closely with the president-elect's transition team," Bush said. "It's important for the American people to know that there is close cooperation. It's important for the American people to know that we will safeguard the financial system as the first step necessary for financial and for economic recovery."

(Reporting by Donna Smith, David Lawder and Matt Spetalnick, Editing by Chizu Nomiyama)