US Treasury Secretary Henry Paulson said yesterday that the US banking system
is sound and the long-term fundamentals of economy are strong.
"I believe that the United States is on the right path to resolving market
disruptions and building a stronger financial system," said Paulson in a speech
delivered at the New York Public Library.
"Working through the current turmoil will take additional time, as markets
and financial institutions continue to reassess risk and re-price securities
across a number of asset classes and sectors," he said.
Paulson asked the public to be patient as regulators work through the
"I am well aware that financial market and housing challenges continue to
concern America's families," said the Treasury chief, "Progress has not come in
a straight line, and we need to remain patient as we work through these
Paulson again urged the Congress to pass this week his proposal to support
the troubled Fannie Mae and Freddie Mac.
Of the US$5 trillion in debt and mortgage backed securities guarantees issued
by these two companies, over US$3 trillion is held by US financial institutions,
and over US$1.5 trillion held by institutions and central banks overseas, said
"Because of their size and scope, Fannie and Freddie's stability is critical
to financial market stability," he noted.
"Investors in our nation and around the world need to know that we understand
how important these institutions are to our capital markets broadly, and to the
US economy," he added.