WASHINGTON – President Bush got on the horn with foreign leaders Wednesday to discuss the various measures the U.S. is taking to bring stability to financial markets, hours after the Federal Reserve and central banks around the world jointly announced rate cuts to help struggling credit markets.
The calls to German Chancellor Angela Merkel and Brazilian President Luiz Inácio Lula da Silva followed the president's talks with other foreign leaders ahead of the Federal Reserve's announcement that it would slice the short-term bank lending rate from 2 percent to 1.5 percent.
In Europe, which also has been hard hit by the financial crisis, the Bank of England cut its rate by half a point to 4.5 percent, and the European Central Bank sliced its rate by half a point to 3.75 percent.
The central banks of China, Canada, Sweden, and Switzerland also cut rates. The Bank of Japan said it strongly supported the actions. The Fed said the round of cooperation is the latest series of coordinated actions in recent weeks to relieve pressure in the global markets.
White House spokesman Tony Fratto welcomed the cooperation among the Fed and other countries' central banks to battle the crisis. "It's important and helpful that central banks are working in a coordinated way to deal with stress in the financial system," Fratto said.
White House officials said Bush called the leaders to stress the importance of all countries working together to address problems facing the global economy. It followed Bush's talks Tuesday with Gordon Brown of England, Silvio Berlusconi of Italy and Nikolas Sarkozy of France on coordinated reductions in bank rates, according to one senior administration official.
In a joint statement, the banking authorities said they had been engaging in "continuous close consultation" throughout the economic turmoil, but that "the recent intensification of the financial crisis has augmented the downside risks to growth."
According to the Federal Reserve, the coordinated rate cut announced Wedndesday "is one of the first" of its kind.
The closest thing to it in modern history occurred after the Sept. 11, 2001, terror attacks, when global banking authorities would announce rate cuts shortly after the Fed, but not simultaneously.
As for Bush, he was clearly communicating with Federal Reserve Chairman Ben Bernanke, who met Tuesday night with other members of the Federal Open Market Committee. However, because the Fed is a quasi-government agency that has independence from the government, the White House was sketchy about the timeline for the president's interaction with the Fed.
"We think that they've made the right moves. And we're not going to comment on any deliberations leading up to decisions," White House Press Secretary Dana Perino said.
While Perino and others suggested Bush did not interfere with the banks' activities, she denied he was merely a "cheerleader."
"I have told you for weeks all of the things that President Bush is doing leading these efforts, challenging the policy-makers, working to get that rescue package passed. I mean, I'm sure you probably don't mean that he was just being a cheerleader," Perino told a White House reporter.
After the interest rate cut, overseas markets continued to tumble on worries that the move wouldn't immediately ease the pain from the financial crisis.
U.S. share prices seesawed, with some investors buying a few beaten-down shares, but most still gloomy about the economy's prospects. The Dow stayed in positive territory for much of the day, the first time a plus sign had been spotted after days of large-scale drops.
But the Dow closed down about190 points.
Last Friday. Bush signed into law a $700 billion bailout of Wall Street that passed the House on its second try in one week.
Treasury Secretary Hank Paulson primarily managed the administration negotiations with Congress. But as the markets continued to feel pressure — stemming from the built-in time lapse needed to get the funds filtered through the markets, Paulson unveiled the strategy for unclogging the markets and getting credit flowing again.
"We will continue to coordinate with other federal regulators and use these tools to implement our strategy to address the four key challenges in our financial markets today — confidence, capital systemic risk and liquidity," he said. Paulson will host a meeting of the G7 Finance Ministers and Central Bank governors at the Treasury Department on Friday.
As analysts continued to remain skeptical, both U.S. presidential contenders embraced the Fed's action.
"This is a global crisis that requires a global solution," said Barack Obama.
John McCain said he hoped it would contain the "financial crisis spreading across the globe."
The fact that the Fed felt it couldn't wait until its regularly scheduled meeting on Oct. 28-29 underscored the urgency of the situation.
One of the goals of the coordinated rate cuts is to spur nervous consumers and businesses to spend more freely again. They clamped down as housing, credit and financial problems intensified last month, throwing Wall Street into chaos. Many believe the United States is on the brink of, or already in, its first recession since 2001, one that could quickly spread to other countries around the globe.
FOX News' Bret Baier, Judd Berger and The Associated Press contributed to this report.