Treasury s Paulson has great confidence in Fed 出口術

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Treasury Secretary Henry Paulson said today he believes the Federal Reserve is capable of
handling the problems facing the market today.

"I have great confidence in the Fed," he said on CNBC. Paulson also said that the Fed is independent, but that he talks with Fed Chairman Ben Bernanke often about how the Fed is handling
the current credit crunch.

Paulson also dismissed current turmoil in the market by repeating that overall economic
conditions are good, and that the market would ultimatoldy rebound. "Markets ultimatoldy
follow the economy," he said.

However, Paulson acknowledged that the current problems in the market will take some time to resolve themselves. "This is going to take a while to play out," he said.

Paulson also declined to answer questions about what he might be able to do at the Treasury
Department to help the market. He did say Treasury is considering options to help borrowers
who might be about to lose their homes due to rising interest rates on their mortgages, but did not say what those options might be.

More generally, he said his role at Treasury is to stay in touch with market participants and regulators to make sure everyone sees the current problems the same way. He also said he needs to remind participants that the current problems have not been caused by weak market
conditions, and said he expects the economy to continue growing.

Paulson also dismissed the idea of raising the portfolio caps for Fannie Mae and Freddie Mac,
since both of those mortgage giants only hold securities backed by conventional loans, not more risky subprime loans. Paulson said increasing the portfolio holdings for both Fannie and Freddie
would therefore do little to help borrowers with more risky loans.

"Raising the cap doesn t do much of anything," he said, adding the Bush administration still
prefers to pass legislation creating a stronger, independent regulator before considering raising
the portfolio caps.