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Politics

Bush says working to limit Lehman impact on markets

WASHINGTON (Reuters) - U.S. President George W. Bush said on Monday his administration was working to limit the impact on financial markets from Lehman Brothers Holdings Inc’s bankruptcy and related developments, but expressed optimism that the capital markets were resilient.

“I know Americans are concerned about the adjustments that are taking place in our financial markets,” Bush told reporters. “At the White House and throughout my administration, we’re focused on them.

“We’re working to reduce disruptions and minimize the impact of these financial market developments on the broader economy,” he said hours after the storied investment bank filed for bankruptcy after more than 150 years in business.

Bush’s attempt to offer some calming words came as the stock markets fell sharply and the Federal Reserve offered a new lifeline to financial institutions, offering to take stock in exchange for cash loans.

After the markets closed, with the Dow Jones industrial average dropping just over 500 points, the White House announced Bush will meet with his Working Group on Financial Markets for a briefing on market conditions on Tuesday and will make a statement afterwards.

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The meeting will include Fed Chairman Ben Bernanke, Treasury Secretary Hank Paulson and Securities and Exchange Commission Chairman Christopher Cox, among others.

Bush last met with the group on March 17, a day after the Fed helped engineer the rescue of Bear Stearns which nearly collapsed after an acute cash shortage caused its trading partners to lose confidence in the firm.

As current concerns escalated about the state of the industry over the weekend, retail brokerage firm Merrill Lynch agreed to be bought by Bank of America and insurance giant American International Group has reportedly sought an emergency loan from the Fed.

Bush on Monday offered his gratitude to regulators and global financial institutions for their efforts to “promote stability in the financial systems.

“As policy-makers, we’re focused on the health of the financial system as a whole. In the short run, adjustments in the financial markets can be painful,” Bush said. “In the long run, I am confident that our capital markets are flexible and resilient and can deal with these adjustments.”

Editing by Chizu Nomiyama and Jan Paschal

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