September 20, 2008	Saturday	Ramazan 19, 1429

WASHINGTON / NEW YORK, Sept 19: US President George W. Bush said on Friday that government intervention was necessary to solve the problems roiling the financial markets, calling it a “pivotal moment for America’s economy”.

“We must act now to protect our nation’s economic health,” President Bush said, after US Treasury Secretary Henry Paulson unveiled plans to offload hundreds of billions of dollars of bad debt from banks’ balance sheets to ease investor fears that had put a stranglehold on the global financial system in recent weeks.

Meanwhile, the US securities regulators joined authorities from other countries in temporarily banning short sales of financial shares, bolstering global stocks, with European shares marking biggest gains ever.

“Given the precarious state of today’s financial markets and their vital importance to the daily lives of the American people, government intervention is not only warranted, it is essential,” he said at the White House.

Mr Bush said it was important to address the root cause behind market instability and the US needed a programme to buy illiquid assets from banks and other financial institutions.

“America’s economy is facing unprecedented challenges, and we are responding with unprecedented action,” Mr Bush said.

He said it was important that Congress pass legislation quickly without adding on “controversial provisions that could delay action.”

“This is a decisive step that will address underlying problems in our financial system,” Mr Bush said. “It will help take pressure off the balance sheets of banks and other financial institutions. It will allow them to resume lending and get our financial system moving again.”

Treasury earlier announced it would siphon up to $50 billion from the country’s Exchange Stabilisation Fund for a temporary guarantee programme to shore up the US money market mutual fund industry.

It was the latest in a number of dramatic measures to prevent credit markets from freezing up over huge losses on sub-prime mortgages.

Secretary Paulson earlier made plain that case-by-case measures were not enough, and called on US lawmakers to forge a broader plan.—Reuters