He was flanked by two of the most powerful players in the global economy: US Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke.
The sub-prime crisis - which is threatening millions of families in the US with eviction, has created turmoil in the financial markets, and lead to serious disruption to the US economy and housing market - had moved to the top of the political agenda.
Action was required, so the Fed intervened by providing massive short-term liquidity to preserve the banking system and cut interest rates twice, the first time by half a percentage point.
This was followed, perhaps belatedly, by new and tougher regulation of the mortgage industry, with new limits on sub-prime "balloon" mortgages, whose payments are fixed for 2 years and then rise sharply to a much higher variable rate.
Recent disturbances in the sub-prime mortgage industry are modest in relation to the size of our economy
President George W Bush
Bush moves to ease lending crisis
Both the Bush administration and the Democrats, which control both Houses of Congress, have been searching for bipartisan solutions that will solve the crisis and provide help to the millions of people - including many victims of predatory lending - now facing eviction.
But deep ideological divisions between the two sides - with the Democrats favouring much tighter regulation of the industry, and the Bush administration looking to private sector solutions - is hampering attempts to reach an early resolution of the problem.
And the two sides also disagree on how severe an impact the crisis will have on the US economy.
Stopping foreclosures
The most urgent problem is to help the millions of homeowners who were sold "balloon" sub-prime mortgages in the past two years, whose interest rates are now set to double, leading to evictions and repossessions - known as foreclosures in the US.
The Bush administration's point man on this issue, Treasury Under Secretary Robert Steel, says he focuses on this issue every day.
"Our role is to ensure that lenders and servicers are being flexible with regard to working with the borrowers," he says in an interview with BBC News.
Our role is to ensure that lenders and servicers are being flexible with regard to working with the borrowers
Robert Steel, US Treasury Under Secretary for Domestic Finance
See the full interview with Robert Steel
The Treasury plan is to bring together lenders and borrowers to work out individual voluntary agreements to avoid foreclosure.
It has created a joint private-public task force, Operation Hope (Home owner protection effort), to encourage lenders to take a softer line, whilst also urging borrowers to tell lenders earlier when they run into financial difficulties.
Yet less than 1% of sub-prime mortgages are successfully renegotiated. Many housing aid agencies say it is impossible for lenders to individually renegotiate the "tidal wave" of troubled mortgages in time to stop foreclosures.
The Fed estimates that every three months, 450,000 families will face sharply higher mortgage rates over the next two years.
They have urged mortgage pools and mortgage servicers to "pursue loss mitigation strategies that preserve home ownership" and to contact borrowers before mortgages go up.
And they are urging a more uniform approach among the lenders on which borrowers will qualify for relief from foreclosure.
The most radical proposal has come from an unlikely source.
Sheila Bair, the head of the Federal Deposit Insurance Corporation, which regulates bank deposits, has suggested a complete freeze on any interest rate increase on these "ballon" mortgages, as long as the mortgage-holder is not already in arrears on his payments.
But she has faced fierce criticism from the mortgage industry, which believes that this would create what economists describe as "moral hazard" - with people who bought more insecure mortgages getting better protection from eviction than people with ordinary mortgages - and thus encouraging people to get more risky mortgages in the future.
Reviving the mortgage markets
The sub-prime crisis has paralysed the mortgage-lending industry, as bondholders are loath to buy mortgage-backed securities unless they are guaranteed by the government.
US property crash hits economy
This has made much more difficult for individuals to get mortgages if they do not qualify for "prime" mortgages funded by the government-sponsored Freddie Mac and other mortgage agencies.
This includes well-off borrowers who want "jumbo mortgages" over $417,000 (£204,000), as well as borrowers with weak credit histories. In all, this includes about a third of all borrowers.
The Democrats, and Freddie Mac itself, say that a quick way to help ease the situation would be to temporarily expand the role of these agencies.
TYPES OF US MORTGAGES
Sub-prime: at a higher rate of interest for people with poor credit history and low income
Alt-A: at a higher rate of interest for people with poor credit history but better jobs
Jumbo: mortgages over $417,000 and not backed by government guarantee
Prime: mortgages under $417,000 backed by government guarantee with stricter loan conditions (also called 'conforming')
They want the government to raise the limit on the maximum size of the mortgages they can insure to $1m, and they want a big increase in the cap that limits the total amount they can provide to the mortgage-backed securities market.
But these agencies have had a troubled recent history, and have been recently put under tighter regulation to correct abuses.
The Bush administration is reluctant, therefore, to give them a bigger role in the mortgage market.
The commercial banks are also against any expansion of the their role, which they say would make the private label mortgage-backed securities market less attractive.
Regulating mortgage brokers
The debate over what long-term changes should be made in the mortgage regulatory system to eliminate the lending abuses of the past decade has proven quite difficult to resolve.
Real estate agents like Suzie Savino are regulated by state laws
The problem is a fight between state and Federal regulators over who should have the main responsibility.
States that have now recognised the problem, for instance Ohio, are worried that the Federal government will opt for the lowest common denominator, and thus introduce standards that are lower than those they have now introduced.
The mortgage industry, on the other hand, would like a uniform national standard, so that it does not have to deal with a multitude of conflicting state regulations.
One compromise - crafted by Barney Frank, chairman of the House Financial Services Committee - would set a minimum Federal standard of good practice, but allow states to go further if they want.
And the House of Representatives has moved swiftly to pass Mr Frank's bill, which was only introduced in October.
It was approved on 15 November by a lopsided vote of 291 - 127, with many Republicans from Northern states hit by the sub-prime crisis breaking ranks to support the measure.
However, Republicans in both the Senate and the White House are warning that the bill goes too far in interfering with mortgage markets, and may make it harder for poor people to get loans in the future.
Restructuring the credit markets
One of the provisions of the bill that has been most strongly opposed by the mortgage industry gives home owners the right to sue the banks who securitised their loans if they did not carry out due diligence in checking that the loans were sold honestly.
Supporters say this is the only way to force the banks that no longer own the mortgages to check them properly, and point out that it limits the damages to the amount of the loan itself, and prevents lawsuits reaching the bondholders who own the mortgages.
Democrats like Maxine Waters, who represents South-Central Los Angeles, have warned the industry to expect even tougher regulation if they do not take more action to stop foreclosures.
But critics of regulation, such as the American Enterprise Institute, argue that any attempt to regulate the $6 trillion mortgage bond market will only have a chilling effect, limiting the availability of mortgages for ordinary people.
But even some conservatives say that the industry as currently structured creates too big a gap between the ultimate owners of mortgages - bondholders around the world - and the mortgage banks who originated the loans.
One proposal, from the former deputy chairman of the Fed, Roger Ferguson, and some European regulators, is to require banks who securitize mortgages to retain a partial equity stake in the loan, to encourage them to scrutinise more carefully whether the mortgages are sound.
There is also strong pressure to regulate the rating agencies, which gave these investments their seal of approval - and perhaps change the current system in which they are paid by the banks issuing the mortgage bonds, not the investors.
Bailing out investors
In the last big banking crisis in the US, when thousands of savings and loan banks went bankrupt after deregulation, the cost to the taxpayer was $150bn - $200bn.
With the Federal budget in deficit, no one at the moment wants to bail out either the banks or the investors who bought these complex and now largely worthless securities, or the borrowers who took out the loans.
Democrats argue that Wall Street should take some of the blame, and therefore financial pain, for the debacle.
Republicans argue that everyone must bear individual responsibility for their bad decisions, and any bail-out would merely encourage banks and individuals to do the same thing again.
However, as the crisis intensifies, and a wave of evictions sweeps America, it may be that tougher laws - and perhaps a compulsory freeze on "balloon" mortgage resets - emerge during the 2008 presidential election year.
On 31 August, President George W Bush appeared in the White House Rose Garden to urge action to deal with a serious crisis in the US economy.
He was flanked by two of the most powerful players in the global economy: US Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke.
The sub-prime crisis - which is threatening millions of families in the US with eviction, has created turmoil in the financial markets, and lead to serious disruption to the US economy and housing market - had moved to the top of the political agenda.
Action was required, so the Fed intervened by providing massive short-term liquidity to preserve the banking system and cut interest rates twice, the first time by half a percentage point.
This was followed, perhaps belatedly, by new and tougher regulation of the mortgage industry, with new limits on sub-prime "balloon" mortgages, whose payments are fixed for 2 years and then rise sharply to a much higher variable rate.
Recent disturbances in the sub-prime mortgage industry are modest in relation to the size of our economy
President George W Bush
Bush moves to ease lending crisis
Both the Bush administration and the Democrats, which control both Houses of Congress, have been searching for bipartisan solutions that will solve the crisis and provide help to the millions of people - including many victims of predatory lending - now facing eviction.
But deep ideological divisions between the two sides - with the Democrats favouring much tighter regulation of the industry, and the Bush administration looking to private sector solutions - is hampering attempts to reach an early resolution of the problem.
And the two sides also disagree on how severe an impact the crisis will have on the US economy.
Stopping foreclosures
The most urgent problem is to help the millions of homeowners who were sold "balloon" sub-prime mortgages in the past two years, whose interest rates are now set to double, leading to evictions and repossessions - known as foreclosures in the US.
The Bush administration's point man on this issue, Treasury Under Secretary Robert Steel, says he focuses on this issue every day.
"Our role is to ensure that lenders and servicers are being flexible with regard to working with the borrowers," he says in an interview with BBC News.
Our role is to ensure that lenders and servicers are being flexible with regard to working with the borrowers
Robert Steel, US Treasury Under Secretary for Domestic Finance
See the full interview with Robert Steel
The Treasury plan is to bring together lenders and borrowers to work out individual voluntary agreements to avoid foreclosure.
It has created a joint private-public task force, Operation Hope (Home owner protection effort), to encourage lenders to take a softer line, whilst also urging borrowers to tell lenders earlier when they run into financial difficulties.
Yet less than 1% of sub-prime mortgages are successfully renegotiated. Many housing aid agencies say it is impossible for lenders to individually renegotiate the "tidal wave" of troubled mortgages in time to stop foreclosures.
The Fed estimates that every three months, 450,000 families will face sharply higher mortgage rates over the next two years.
They have urged mortgage pools and mortgage servicers to "pursue loss mitigation strategies that preserve home ownership" and to contact borrowers before mortgages go up.
And they are urging a more uniform approach among the lenders on which borrowers will qualify for relief from foreclosure.
The most radical proposal has come from an unlikely source.
Sheila Bair, the head of the Federal Deposit Insurance Corporation, which regulates bank deposits, has suggested a complete freeze on any interest rate increase on these "ballon" mortgages, as long as the mortgage-holder is not already in arrears on his payments.
But she has faced fierce criticism from the mortgage industry, which believes that this would create what economists describe as "moral hazard" - with people who bought more insecure mortgages getting better protection from eviction than people with ordinary mortgages - and thus encouraging people to get more risky mortgages in the future.
Reviving the mortgage markets
The sub-prime crisis has paralysed the mortgage-lending industry, as bondholders are loath to buy mortgage-backed securities unless they are guaranteed by the government.
US property crash hits economy
This has made much more difficult for individuals to get mortgages if they do not qualify for "prime" mortgages funded by the government-sponsored Freddie Mac and other mortgage agencies.
This includes well-off borrowers who want "jumbo mortgages" over $417,000 (£204,000), as well as borrowers with weak credit histories. In all, this includes about a third of all borrowers.
The Democrats, and Freddie Mac itself, say that a quick way to help ease the situation would be to temporarily expand the role of these agencies.
TYPES OF US MORTGAGES
Sub-prime: at a higher rate of interest for people with poor credit history and low income
Alt-A: at a higher rate of interest for people with poor credit history but better jobs
Jumbo: mortgages over $417,000 and not backed by government guarantee
Prime: mortgages under $417,000 backed by government guarantee with stricter loan conditions (also called 'conforming')
They want the government to raise the limit on the maximum size of the mortgages they can insure to $1m, and they want a big increase in the cap that limits the total amount they can provide to the mortgage-backed securities market.
But these agencies have had a troubled recent history, and have been recently put under tighter regulation to correct abuses.
The Bush administration is reluctant, therefore, to give them a bigger role in the mortgage market.
The commercial banks are also against any expansion of the their role, which they say would make the private label mortgage-backed securities market less attractive.
Regulating mortgage brokers
The debate over what long-term changes should be made in the mortgage regulatory system to eliminate the lending abuses of the past decade has proven quite difficult to resolve.
Real estate agents like Suzie Savino are regulated by state laws
The problem is a fight between state and Federal regulators over who should have the main responsibility.
States that have now recognised the problem, for instance Ohio, are worried that the Federal government will opt for the lowest common denominator, and thus introduce standards that are lower than those they have now introduced.
The mortgage industry, on the other hand, would like a uniform national standard, so that it does not have to deal with a multitude of conflicting state regulations.
One compromise - crafted by Barney Frank, chairman of the House Financial Services Committee - would set a minimum Federal standard of good practice, but allow states to go further if they want.
And the House of Representatives has moved swiftly to pass Mr Frank's bill, which was only introduced in October.
It was approved on 15 November by a lopsided vote of 291 - 127, with many Republicans from Northern states hit by the sub-prime crisis breaking ranks to support the measure.
However, Republicans in both the Senate and the White House are warning that the bill goes too far in interfering with mortgage markets, and may make it harder for poor people to get loans in the future.
Restructuring the credit markets
One of the provisions of the bill that has been most strongly opposed by the mortgage industry gives home owners the right to sue the banks who securitised their loans if they did not carry out due diligence in checking that the loans were sold honestly.
Supporters say this is the only way to force the banks that no longer own the mortgages to check them properly, and point out that it limits the damages to the amount of the loan itself, and prevents lawsuits reaching the bondholders who own the mortgages.
Democrats like Maxine Waters, who represents South-Central Los Angeles, have warned the industry to expect even tougher regulation if they do not take more action to stop foreclosures.
But critics of regulation, such as the American Enterprise Institute, argue that any attempt to regulate the $6 trillion mortgage bond market will only have a chilling effect, limiting the availability of mortgages for ordinary people.
But even some conservatives say that the industry as currently structured creates too big a gap between the ultimate owners of mortgages - bondholders around the world - and the mortgage banks who originated the loans.
One proposal, from the former deputy chairman of the Fed, Roger Ferguson, and some European regulators, is to require banks who securitize mortgages to retain a partial equity stake in the loan, to encourage them to scrutinise more carefully whether the mortgages are sound.
There is also strong pressure to regulate the rating agencies, which gave these investments their seal of approval - and perhaps change the current system in which they are paid by the banks issuing the mortgage bonds, not the investors.
Bailing out investors
In the last big banking crisis in the US, when thousands of savings and loan banks went bankrupt after deregulation, the cost to the taxpayer was $150bn - $200bn.
With the Federal budget in deficit, no one at the moment wants to bail out either the banks or the investors who bought these complex and now largely worthless securities, or the borrowers who took out the loans.
Democrats argue that Wall Street should take some of the blame, and therefore financial pain, for the debacle.
Republicans argue that everyone must bear individual responsibility for their bad decisions, and any bail-out would merely encourage banks and individuals to do the same thing again.
However, as the crisis intensifies, and a wave of evictions sweeps America, it may be that tougher laws - and perhaps a compulsory freeze on "balloon" mortgage resets - emerge during the 2008 presidential election year.
He was flanked by two of the most powerful players in the global economy: US Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke.
The sub-prime crisis - which is threatening millions of families in the US with eviction, has created turmoil in the financial markets, and lead to serious disruption to the US economy and housing market - had moved to the top of the political agenda.
Action was required, so the Fed intervened by providing massive short-term liquidity to preserve the banking system and cut interest rates twice, the first time by half a percentage point.
This was followed, perhaps belatedly, by new and tougher regulation of the mortgage industry, with new limits on sub-prime "balloon" mortgages, whose payments are fixed for 2 years and then rise sharply to a much higher variable rate.
Recent disturbances in the sub-prime mortgage industry are modest in relation to the size of our economy
President George W Bush
Bush moves to ease lending crisis
Both the Bush administration and the Democrats, which control both Houses of Congress, have been searching for bipartisan solutions that will solve the crisis and provide help to the millions of people - including many victims of predatory lending - now facing eviction.
But deep ideological divisions between the two sides - with the Democrats favouring much tighter regulation of the industry, and the Bush administration looking to private sector solutions - is hampering attempts to reach an early resolution of the problem.
And the two sides also disagree on how severe an impact the crisis will have on the US economy.
Stopping foreclosures
The most urgent problem is to help the millions of homeowners who were sold "balloon" sub-prime mortgages in the past two years, whose interest rates are now set to double, leading to evictions and repossessions - known as foreclosures in the US.
The Bush administration's point man on this issue, Treasury Under Secretary Robert Steel, says he focuses on this issue every day.
"Our role is to ensure that lenders and servicers are being flexible with regard to working with the borrowers," he says in an interview with BBC News.
Our role is to ensure that lenders and servicers are being flexible with regard to working with the borrowers
Robert Steel, US Treasury Under Secretary for Domestic Finance
See the full interview with Robert Steel
The Treasury plan is to bring together lenders and borrowers to work out individual voluntary agreements to avoid foreclosure.
It has created a joint private-public task force, Operation Hope (Home owner protection effort), to encourage lenders to take a softer line, whilst also urging borrowers to tell lenders earlier when they run into financial difficulties.
Yet less than 1% of sub-prime mortgages are successfully renegotiated. Many housing aid agencies say it is impossible for lenders to individually renegotiate the "tidal wave" of troubled mortgages in time to stop foreclosures.
The Fed estimates that every three months, 450,000 families will face sharply higher mortgage rates over the next two years.
They have urged mortgage pools and mortgage servicers to "pursue loss mitigation strategies that preserve home ownership" and to contact borrowers before mortgages go up.
And they are urging a more uniform approach among the lenders on which borrowers will qualify for relief from foreclosure.
The most radical proposal has come from an unlikely source.
Sheila Bair, the head of the Federal Deposit Insurance Corporation, which regulates bank deposits, has suggested a complete freeze on any interest rate increase on these "ballon" mortgages, as long as the mortgage-holder is not already in arrears on his payments.
But she has faced fierce criticism from the mortgage industry, which believes that this would create what economists describe as "moral hazard" - with people who bought more insecure mortgages getting better protection from eviction than people with ordinary mortgages - and thus encouraging people to get more risky mortgages in the future.
Reviving the mortgage markets
The sub-prime crisis has paralysed the mortgage-lending industry, as bondholders are loath to buy mortgage-backed securities unless they are guaranteed by the government.
US property crash hits economy
This has made much more difficult for individuals to get mortgages if they do not qualify for "prime" mortgages funded by the government-sponsored Freddie Mac and other mortgage agencies.
This includes well-off borrowers who want "jumbo mortgages" over $417,000 (£204,000), as well as borrowers with weak credit histories. In all, this includes about a third of all borrowers.
The Democrats, and Freddie Mac itself, say that a quick way to help ease the situation would be to temporarily expand the role of these agencies.
TYPES OF US MORTGAGES
Sub-prime: at a higher rate of interest for people with poor credit history and low income
Alt-A: at a higher rate of interest for people with poor credit history but better jobs
Jumbo: mortgages over $417,000 and not backed by government guarantee
Prime: mortgages under $417,000 backed by government guarantee with stricter loan conditions (also called 'conforming')
They want the government to raise the limit on the maximum size of the mortgages they can insure to $1m, and they want a big increase in the cap that limits the total amount they can provide to the mortgage-backed securities market.
But these agencies have had a troubled recent history, and have been recently put under tighter regulation to correct abuses.
The Bush administration is reluctant, therefore, to give them a bigger role in the mortgage market.
The commercial banks are also against any expansion of the their role, which they say would make the private label mortgage-backed securities market less attractive.
Regulating mortgage brokers
The debate over what long-term changes should be made in the mortgage regulatory system to eliminate the lending abuses of the past decade has proven quite difficult to resolve.
Real estate agents like Suzie Savino are regulated by state laws
The problem is a fight between state and Federal regulators over who should have the main responsibility.
States that have now recognised the problem, for instance Ohio, are worried that the Federal government will opt for the lowest common denominator, and thus introduce standards that are lower than those they have now introduced.
The mortgage industry, on the other hand, would like a uniform national standard, so that it does not have to deal with a multitude of conflicting state regulations.
One compromise - crafted by Barney Frank, chairman of the House Financial Services Committee - would set a minimum Federal standard of good practice, but allow states to go further if they want.
And the House of Representatives has moved swiftly to pass Mr Frank's bill, which was only introduced in October.
It was approved on 15 November by a lopsided vote of 291 - 127, with many Republicans from Northern states hit by the sub-prime crisis breaking ranks to support the measure.
However, Republicans in both the Senate and the White House are warning that the bill goes too far in interfering with mortgage markets, and may make it harder for poor people to get loans in the future.
Restructuring the credit markets
One of the provisions of the bill that has been most strongly opposed by the mortgage industry gives home owners the right to sue the banks who securitised their loans if they did not carry out due diligence in checking that the loans were sold honestly.
Supporters say this is the only way to force the banks that no longer own the mortgages to check them properly, and point out that it limits the damages to the amount of the loan itself, and prevents lawsuits reaching the bondholders who own the mortgages.
Democrats like Maxine Waters, who represents South-Central Los Angeles, have warned the industry to expect even tougher regulation if they do not take more action to stop foreclosures.
But critics of regulation, such as the American Enterprise Institute, argue that any attempt to regulate the $6 trillion mortgage bond market will only have a chilling effect, limiting the availability of mortgages for ordinary people.
But even some conservatives say that the industry as currently structured creates too big a gap between the ultimate owners of mortgages - bondholders around the world - and the mortgage banks who originated the loans.
One proposal, from the former deputy chairman of the Fed, Roger Ferguson, and some European regulators, is to require banks who securitize mortgages to retain a partial equity stake in the loan, to encourage them to scrutinise more carefully whether the mortgages are sound.
There is also strong pressure to regulate the rating agencies, which gave these investments their seal of approval - and perhaps change the current system in which they are paid by the banks issuing the mortgage bonds, not the investors.
Bailing out investors
In the last big banking crisis in the US, when thousands of savings and loan banks went bankrupt after deregulation, the cost to the taxpayer was $150bn - $200bn.
With the Federal budget in deficit, no one at the moment wants to bail out either the banks or the investors who bought these complex and now largely worthless securities, or the borrowers who took out the loans.
Democrats argue that Wall Street should take some of the blame, and therefore financial pain, for the debacle.
Republicans argue that everyone must bear individual responsibility for their bad decisions, and any bail-out would merely encourage banks and individuals to do the same thing again.
However, as the crisis intensifies, and a wave of evictions sweeps America, it may be that tougher laws - and perhaps a compulsory freeze on "balloon" mortgage resets - emerge during the 2008 presidential election year.
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