US President George W. Bush said today he was concerned about the financial markets and the US economy, which were trying to absorb the US government's "extraordinary measures" to shore them up.
In his first remarks on the financial crisis since the rescue by US authorities of insurance giant American International Group, he said the recent efforts by his administration and the Federal Reserve were necessary moves.
"The American people are concerned about the situation in our financial markets and our economy, and I share their concerns," he told reporters in a brief statement outside the Oval Office at the White House.
Morgan Stanley today topped the list of major financial firms scrambling to find a buyer, while central banks around the world rushed in $180 billion of extra liquidity to bring some calm to panicked stock and money markets.
He earlier canceled a trip to Alabama and Florida today where he was slated to attend closed-door fund-raisers and make brief remarks about energy, instead deciding to stay at the White House to monitor the unfolding financial crisis.
"Our financial markets continue to deal with serious challenges," he said. "As our recent actions demonstrate, my administration is focused on meeting these challenges."
He sought to reassure investors, pointing to the government's takeover of mortgage financing giants Freddie Mac and Fannie Mae "to help promote market stability and to ensure they continue to play a role in helping our housing market recover."
He also noted that the Securities and Exchange Commission had made moves to shore up investor protections and boost enforcement against illegal market manipulation.
"These actions are necessary, and they're important, and the markets are adjusting to them," he said. "The American people can be sure we will continue to act to strengthen and stabilize our financial markets and improve investor confidence," he said.
However, Mr Bush did not repeat his frequent remarks that the US economy was going through a "rough patch" or that the long-term fundamentals were sound.
Meanwhile New York has started a wide-ranging probe into possible illegal short-selling in the stocks of Wall Street firms such as Goldman Sachs Group and Morgan Stanley, Attorney General Andrew Cuomo said today.
Mr Cuomo said on a conference call with reporters: "I want the short-sellers to know today that I am watching. If it is proper and legal then there is nothing to worry about."
He said his office was concerned about destabilization of the market. He said it would also look back into possible illegal short-selling that may have occurred in stocks of Lehman Brothers Holdings Inc and American International Group, two firms at the heart of the Wall Street crisis.
The UK Financial Services Authority imposed a temporary ban on short-selling financial stocks today, saying the measure was needed to prevent further instability in the financial sector.
The FSA said the ban will remain in force until January 16th next year, and will be subject to an initial review after thirty days.
Under the ban, investors will be barred from taking new short positions or adding to existing ones in financial shares from midnight tonight.
The move comes hours after UK bank Lloyds TSB Group agreed to buy rival HBOS in a rescue takeover following a dramatic fall in the HBOS share price earlier this week.
"We have taken this decisive action, after careful consideration, to protect the fundamental integrity and quality of markets and to guard against further instability in the financial sector," FSA Chief Executive Hector Sants said in a statement.