WASHINGTON President George W. Bush warned on Wednesday that the United States was in the middle of a serious financial crisis that could push the economy into a long-term recession if the government did not act.
In a televised address aimed at persuading the public to support a $700 billion financial bailout being negotiated with Congress, Bush said his "natural instinct" was to oppose government intervention in the financial sector, but the financial turmoil called for a different approach.
"I believe companies that make bad decisions should be allowed to go out of business," Bush said. "Under normal circumstances, I would have followed this course. But these are not normal circumstances."
He cited a market that was not functioning properly, a widespread loss of confidence and major financial sectors at risk of shutting down.
More financial distress could lead more banks to fail, the stock market to drop further, businesses to close, job losses and home values to drop, Bush said.
"And, ultimately, our country could experience a long and painful recession," Bush said. "Fellow citizens, we must not let this happen."
Less than two hours before the speech, Bush telephoned Democratic presidential nominee Barack Obama and invited him to the White House on Thursday for a meeting with congressional leaders and Republican nominee John McCain on the financial bailout package.
Obama accepted and McCain had already said he would suspend his campaign and return to Washington to help work on the bailout.
The Bush administration and Congress have been trying to hammer out an agreement on a plan that would allow the government to step in and take illiquid loans from shaky Wall Street firms to address financial turmoil in the markets.
The unprecedented bailout has met skepticism and anger from lawmakers who argue that the administration's proposal should not just be rubber-stamped. But they have also avoided suggesting they would block the plan for fear of spooking the markets.
Bush said again that urgent action was needed to bolster the markets. His last prime-time national televised address was on September 13, 2007, when he spoke of the "way forward in Iraq."
Senate Majority Leader Harry Reid, a Nevada Democrat, said Bush had a lot of explaining to do in his speech.
"It is time for him to explain why his administration sat on its hands for months and only now has come to realize the need for immediate and unprecedented government action," Reid said before Bush's address.
(Editing by Chris Wilson)