NEW YORK (Reuters) - U.S. Treasury Secretary Henry Paulson
said U.S. financial markets are emerging from the credit crunch
that many economists believe has pushed the country to the
brink of recession, according to The Wall Street Journal.
"I do believe that the worst is likely to be behind us,"
Paulson told the newspaper in an interview.
The Journal said Paulson's comments appear to be the Bush
administration's most optimistic assessment yet about the
financial turmoil that began last year with defaults on
subprime home loans and spread through financial institutions
that owned tens of billions of dollars in mortgage-backed
securities.
In the interview, however, the Treasury Secretary predicted
there would be further "bumps along the road," and that it
would take "some months longer" for the market distress to
fully dissipate. Some financial markets, he said, still aren't
fully functioning.
The Journal said Paulson pointed to the Federal Reserve's
decision to help prevent the collapse of Bear Stearns (BSC.N: Quote, Profile, Research)
and to provide liquidity to other investment banks as "an
inflection point" in the crisis.
The newspaper said Paulson also believes Congress will soon
pass two measures he considers critical: one to improve the
regulation of Fannie Mae (FNM.N: Quote, Profile, Research) and Freddie Mac (FRE.N: Quote, Profile, Research), the
government-chartered mortgage companies, and another to
overhaul the Federal Housing Administration.
(Reporting by Mark McSherry; Editing by Braden Reddall)
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