Treasury Secretary Henry Paulson on Monday said that the turbulent U.S. economy may stabilize in a matter of months if the housing market is able to level out.
“There is a reasonable chance that the biggest part of that housing correction can be behind us in a number of months. I’m not saying two or three months, but in months as opposed to years,” Mr. Paulson told reporters during a briefing at the White House.
“Until we stem the housing correction,” Mr. Paulson said, “we’ll continue to have turmoil in the financial markets.”
Mr. Paulson said the current financial crisis — with the bankruptcy of Lehman Brothers and the sale of Merrill Lynch to Bank of America — is due to “excesses that have built up for a long period of time” in the lending industry.
He also blamed “an archaic regulatory structure” that “really needs to be rebuilt.”
But he expressed hope that the federal government’s backstopping last week of Fannie Mae and Freddie Mac will be the move that gets the housing market back on track.