Bush urges patience for credit market recovery

U.S. President George W. Bush cautioned there will be no immediate fix of the credit market crisis as he defended the government's intervention as a measure of "last resort."

"It took a while for the credit markets to freeze up, and it's going to take a while for the credit system to thaw," Bush said in 20 minutes of remarks delivered across the street from the White House at the U.S. Chamber of Commerce building.

Bush said the U.S. is dealing with a "serious financial crisis" but that he realized Americans are concerned about the government's activist response.

He acknowledged that the government has taken "aggressive measures" that are "big enough and bold enough to work," and suggested the government had no choice.

Among the major steps taken in the last month was a Treasury Department announcement that it would inject up to $250 billion in U.S. banks in return for partial ownership stakes.

The Federal Deposit Insurance Corp. also has promised to temporarily guarantee new issues of bank debt and to provide unlimited deposit insurance for non-interest bearing accounts, mainly used by small businesses.

Despite massive infusions of government cash, the markets have swung wildly and mostly downward.

But Bush said the steps will help banks get money flowing and ensure big businesses don't shut down operations.

He said the actions are "an extraordinary response to an extraordinary crisis."

"As a strong believer in free markets, I would oppose such measures under ordinary circumstances. But these are not ordinary circumstances. We took these measures as a last resort."

Had the government not acted, Bush said, the "hole in our financial system would have grown larger" and the government would have had to respond with more "drastic and costly measures later on." 

Bush insisted the moves are not the first steps toward nationalizing banks, saying government involvement will be limited in size, scope and duration.

He said that in the past, the government has taken control over private companies in the banking industry during a financial crisis, but relinquished that control when the crisis ended.

"And we will do so again," he said.

The purpose is not to "weaken the free market" but to "preserve the free market," Bush said.