Paulson Warns of Limits to Propping Up Economy
By Zachary A. Goldfarb
Treasury Secretary Henry M. Paulson Jr. said today that there are limits to what the government can do to contain the unfolding economic downturn, but he defended the steps taken to stimulate the economy and stabilize the financial markets.
"When there are excesses, excesses we've seen in the housing market, a correction there is inevitable. You're going to see a correction. Can we outlaw the forces of gravity? You know, how much can government do?" Paulson said on "Fox News Sunday. "But this administration has been focused on this."
Paulson stood by the decision last week by the Federal Reserve to help bail out investment bank Bear Stearns. "I think we made the right decision. I think the Federal Reserve made the right decision here," Paulson said.
Paulson added that the financial markets remain strong but that the government "is prepared to do what it takes to maintain the stability of our financial system."
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