US President George W Bush this evening tried to calm financial market turmoil from the credit crisis by announcing proposals intended to prevent homeowners from defaulting on risky mortgages.
Rising US defaults on so-called subprime mortgages to less credit-worthy borrowers have caused volatility in financial markets around the world and raised concerns that the US economy could fall into recession.
In trying to soothe those worries, Mr Bush said the US economy was healthy enough to weather the credit crisis and that the subprime market problems represented only a "modest" part of the economy.
"The recent disturbances in the subprime mortgage industry are modest, they're modest in relation to the size of our economy," he said.
But he emphasized that it was not the federal government's job to bail out the mortgage lending industry, a comment that caused US stock prices to pare gains.
"The government's got a role to play. But it is limited. A federal bailout of lenders would only encourage a recurrence of the problem," Mr Bush said in a statement in the Rose Garden.
On Capitol Hill, Democratic lawmakers took issue with Mr Bush's stand-back approach and urged more direct action to protect homeowners who may not realise the pitfalls they face from rising interest rates.
Earlier, at a central bankers' symposium in Wyoming, Federal Reserve Chairman Ben Bernanke made clear that he was following what analysts have described as a "tough love" policy toward borrowers and especially toward lenders.
Mr Bush urged lenders to work with homeowners to renegotiate their mortgages to prevent default. He called on Congress to approve legislation he proposed last year to modernise the Federal Housing Administration (FHA), which provides mortgage insurance to borrowers through a network of private-sector lenders.
The administration proposal would lower the required down payment for FHA loans and raise the limit on mortgages that would be eligible. The FHA will soon launch a new program called "FHA Secure" to allow homeowners with good credit history, but who cannot afford their current payments, to refinance into FHA-insured mortgages, Mr Bush said.
"This means that many families who are struggling now will be able to refinance their loans, meet their monthly payments and keep their homes," he said.
Mr Bush also pledged to work with the Democratic-controlled Congress to temporarily reform a key housing provision of the federal tax code to make it easier for homeowners to refinance their mortgages.