Paulson: Major Financial Institutions Stabilized

Treasury Secretary Henry Paulson said Tuesday that he does not expect any more major financial institutions to fail during the current credit crisis.

Treasury Secretary Henry Paulson speaks during a briefing at the Treasury Department Nov. 25, 2008, in Washington. Paulson briefed reporters on the implementation of the Emergency Economic Stabilization Act.

(Mark Wilson/Getty Images)

Paulson also said he has no plans to ask Congress to make the second half of the $700 billion financial rescue fund available before the Bush administration leaves office on Jan. 20.

In an interview on CNBC, Paulson said he believes the actions taken by financial authorities in the U.S. and other countries will allow all the systemically important institutions to remain viable.

The administration has obligated almost all of the first $350 billion in the financial rescue package approved by Congress on Oct. 3. There had been speculation that the Bush administration would ask for approval to begin using the second $350 billion in the bailout bill before leaving office.

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But Paulson said Tuesday he believed the government had a "lot of firepower" at its disposal currently, including the rescue program and multibillion-dollar loan programs being used by the Federal Reserve and other banking authorities. For that reason, he said he did not see a need to request authorization from Congress to tap the second half of the rescue package.

The Fed on Tuesday said it had reduced the federal funds rate, the interest that banks charge each other, to a range of zero to 0.25 percent. That is down from the 1 percent target rate in effect since the last meeting in October. The aggressive move was greeted enthusiastically by Wall Street as the Dow Jones industrial average rose nearly 360 points.

Separately, the Treasury Department announced that it had provided an additional $2.45 billion in direct purchases of bank stock involving 28 more banks.

The new group of banks brings to 116 those that have received government support through stock purchases. The administration announced in mid-October that the stock purchases would be the major way it planned to use $250 billion of the rescue program. The amount distributed to the banks so far totals $167.76 billion, Treasury said.