WASHINGTON (Reuters) - President George W. Bush plans to meet on Monday with top U.S. financial policymakers, the White House said, at a time of increased strains in credit markets and fears of a recession.
The White House said on Saturday Bush will meet members of the President’s Working Group on Financial Markets, and a spokeswoman said Bush will get a status report on the markets.
The economy has become increasingly important in the U.S. presidential campaign, surpassing the Iraq war as the top concern of voters heading into the November election. A protracted downturn could bode ill for presumptive Republican nominee John McCain, whom Democrats have been trying to taint with allegiance to polices of fellow Republican Bush.
Speaking to reporters on her campaign plane in Pittsburgh as she focused on Pennsylvania ahead of its crucial April 22 primary, Democratic presidential hopeful Hillary Clinton repeated her concerns about the economy.
“It’s ironic that President Bush is in New York talking about how he recognizes there are economic problems in the country at the same time that the Fed is moving to try to stem the continuing erosion in the credits market around the world because of a lot of failed policies and lax oversight and neglect of the Bush administration,” Clinton, a New York Democrat, said.
The working group is led by U.S. Treasury Secretary Henry Paulson and also includes Federal Reserve Chairman Ben Bernanke as well as the heads of the Securities and Exchange Commission and the Commodity Futures Trading Commission.
A sharp downturn in the U.S. housing market has led to a full-blown credit crisis that has reverberated throughout the U.S. financial system.
On Friday, Bear Stearns, the fifth largest investment bank, said it was turning to JPMorgan Chase and the Fed to secure emergency financing, an effort also involving the Treasury. The broker was hard hit by its heavy exposure to the faltering U.S. mortgage market.
The president’s working group on Thursday issued wide-ranging recommendations to toughen rules for mortgage brokers, lenders and credit agencies.
Democrats in Congress are pushing for legislation under which the Federal Housing Administration could play a larger role in helping to stem the rising tide of home foreclosures that threatens to swamp the financial system.
However, the Bush administration has been cool to any proposals that would expand the government’s role.
In his Saturday radio address, Bush addressed the economy for the second straight day, after remarks on Friday in New York City acknowledging that times were tough.
“In the long run, we can be confident that our economy will continue to grow, but in the short run, it is clear that growth has slowed,” Bush said. “A root cause of the economic slowdown has been the downturn in the housing market.”
Bush urged Congress to approve legislation to reform Fannie Mae and Freddie Mac, federally-sponsored corporations that make and guarantee loans.
The legislation would also modernize the Federal Housing Administration and allow state housing agencies to issue tax-free bonds to help homeowners refinance their mortgages.
Bush cautioned against “sweeping government solutions” which might hurt homeowners more than they help.
Additional reporting by Tim Ahmann and Jeff Mason, editing by Alan Elsner and Vicki Allen
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