Bush: Ready to take more steps to stabilize markets

By Jeremy Pelofsky

WASHINGTON (Reuters) - President George W. Bush on Thursday expressed concerns about the turmoil in financial markets and said his administration was prepared to go beyond the "extraordinary measures" already taken to strengthen and stabilize them.

"The American people can be sure we will continue to act to strengthen and stabilize our financial markets and improve investor confidence," he told reporters in a brief statement outside the Oval Office at the White House.

White House Spokeswoman Dana Perino declined to comment on what possible further steps, if any, were under consideration.

In Bush's first remarks on the financial crisis since the rescue by U.S. authorities of insurance giant American International Group, he said the recent steps by his administration and the Federal Reserve were necessary.

"The American people are concerned about the situation in our financial markets and our economy, and I share their concerns," he said.

Bush is scheduled to meet with Treasury Secretary Henry Paulson later on Thursday.

Earlier this week the Fed and the Treasury Department engineered a bailout of AIG, offering up to $85 billion in loans in exchange for a 79.9 percent stake. However, the administration declined to provide aid to Lehman Brothers Holdings Inc, which then filed for bankruptcy.

Still, there has been bipartisan congressional criticism of the administration for not adequately briefing lawmakers about the AIG rescue plan before it was unveiled. Democrats have also blasted Bush for what they described as his deregulation policies, saying they contributed to the crisis.

Bush's decision to address the turmoil came as stock indices were in positive territory, though they have since turned negative and the financial industry was full of news about possible further consolidation.

Morgan Stanley on Thursday topped the list of major financial firms scrambling to find a buyer, while central banks around the world rushed in $180 billion of extra liquidity to bring some calm to panicked stock and money markets.

Bush canceled a trip to Alabama and Florida, where he was slated to attend closed-door fund-raisers on Thursday and make brief remarks about energy, instead deciding to stay at the White House to monitor the unfolding financial crisis.

"Our financial markets continue to deal with serious challenges," he said. "As our recent actions demonstrate, my administration is focused on meeting these challenges."

The president sought to reassure investors, pointing to the government's takeover of mortgage financing giants Freddie Mac and Fannie Mae "to help promote market stability and to ensure they continue to play a role in helping our housing market recover."

He also noted that the Securities and Exchange Commission had made moves to shore up investor protections and boost enforcement against illegal market manipulation.

"These actions are necessary, and they're important, and the markets are adjusting to them," Bush said. However, he did not repeat his frequent remarks that the U.S. economy was going through a "rough patch" or that the long-term fundamentals were sound.

(Additional reporting by Matt Spetalnick; Editing by Dan Grebler)