March 14 (Bloomberg) -- President George W. Bush said the Federal Reserve and his administration would take ``appropriate steps'' to stabilize financial markets and the U.S. economy would recover.

``Our economy obviously is going through a tough time,'' Bush said in a speech today to business and finance leaders at the Economic Club of New York. ``It's going through a tough time in the housing market and it's going through a tough time in the financial markets.''

U.S. stocks today fell for the third day this week after Bear Stearns Cos., the second-largest underwriter of U.S. mortgage bonds, was bailed out by the Fed and JPMorgan Chase & Co. to stem worsening finances.

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The Fed and the Treasury Department acted ``to mitigate disruptions to our financial markets,'' Bush said. ``Today's events are fast moving, but the chairman of the Federal Reserve and the secretary of the Treasury are on top them and will take the appropriate steps to promote stability in our markets.''

``I believe that we're a resilient economy,'' Bush said. ``In the long run. I'm confident our economy will continue to grow because the foundation is solid.''

Home Loan Defaults

A surge in defaults on mortgages to higher-risk borrowers spurred the collapse of the U.S. home loan market. Defaults have continued to rise even as the Fed has cut the benchmark interest rate five times since September.

Bush noted the strain on homeowners. ``A growing number of people are facing the prospect of foreclosure,'' he said.

He cited steps to help troubled homeowners, including help that's refinanced $17 billion worth of mortgages so far. ``The program is beginning to work, beginning to help,'' he said.

Members of the alliance of lenders and homeowners ``report that the number of homeowners working out their mortgages is now rising faster than the number entering foreclosure,'' Bush said.

``The market is in the process of correcting itself,'' the president said, adding that he opposes spending billions of dollars to buy up empty homes.

``The temptation is for people, in their attempt to limit the number of foreclosures, to put bad law in place,'' Bush said. ``I believe there ought to be action, but I'm deeply concerned about law and regulation that will make it harder for the markets to recover.''

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