Treasury Secretary Henry Paulson said Monday that he is still looking at new ways to stabilize the financial markets and stimulate the economy, including methods for lowering the number of foreclosures.
Paulson, who will leave office early next year when the new presidential administration takes over, also noted that government actions taken to combat the financial crisis have made progress, though there is still much improvement that needs to be made.
"We are actively engaged in developing additional programs to strengthen our financial system so that lending flows into our economy," Paulson told the audience at the Fortune 500 Forum in Washington.
He added, "When these programs are ready for implementation, we will discuss them with the Congress and the next Administration."
On the crisis in general, Paulson stated, "Today we continue to work through a severe financial crisis. While we are making progress, the journey ahead will continue to be a difficult one."
As head of the Treasury Department, Paulson has led the government's efforts to stabilize the financial markets after a meltdown in the housing market led to wide-spread turmoil.
The main tool at Paulson's disposal is the Troubled Asset Relief Program, or TARP, the $700 billion financial rescue package that Congress passed in October. The Treasury Department has set aside the first $250 billion of this money to make direct equity investments in banks, a move aimed at improving capital positions at the companies.
The financial relief money is available in installments. With the first $350 billion mostly spoken for, there has been discussion about whether Paulson will ask for access to the second half of the money or leave that decision to the next presidential administration.
On January 20th, Barack Obama will be inaugurated as president. He has already tapped New York Federal Reserve President Timothy Geithner as his pick for the next Treasury Secretary.
As the head of the New York Federal Reserve, Geithner has been closely involved in the interventions the government has used to stabilize the markets.
In Monday's remarks, Paulson suggested that the government would keep the needs of the next administration in mind when deciding whether to go ahead with any new courses of action.
"As we consider potential new TARP programs, we must also maintain flexibility and firepower for this Administration and the next, to address new challenges as they arise," Paulson said.
Earlier on Monday, Federal Reserve Chairman Ben Bernanke, who has also been at the forefront of the government's financial efforts, admitted that there was only so much the central bank can accomplish with further interest rate reductions, but he stressed that the Fed could still use its other tools to help support financial markets and stimulate the economy.
Speaking at an event hosted by the Greater Austin Chamber of Commerce in Austin, Texas, Bernanke said that further rate cuts from already low levels were "certainly feasible," but he warned that the impact from these would be "limited."
In addition, the body charged with the task of officially identifying recessions said Monday that the U.S. began its economic slump in December of last year.
National Bureau of Economic Research determined that the peak in economic activity took place in the U.S. economy in December 2007. This marked the end of an expansion that began in November 2001 and the beginning of a recession.
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