The long-awaited speech by US President Bush did less to allay worries about the subprime mortgage crisis than had been expected.President Bush said:
“The Government has got a role to play. But it’s limited. A federal bailout of lenders would only encourage a recurrence of the problem. It’s not the government’s job to bail out the speculators”.
US stocks cut gains after Bush’s speech. Originally gains had been significant, on higher expectations. The situation will take more time than previously expected, to be resolved.
Bush’s remarks echoed those of Federal Reserve Chairman Ben Bernanke who said the Central Bank did not intend to rescue lenders and investors who made bad decisions.
Analysts say the Fed could cut interest rates by a quarter percent to five percent in mid September.
The US subprime mortgage turmoil has led to a tightening of credit and volatile stock markets round the world in recent weeks.