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Treasury Secretary Henry Paulson said
Wednesday he expects improvement in the condition of the economy
over time but that there will be "a bump in the road" along the
way.
      

Paulson said the government's decision to buy into the nation's
banking system with a $250 billion investment in nine large banks
at the outset should stabilize the financial system and loosen the
tight credit market.
      
The secretary acknowledged in an interview on ABC's "Good
Morning America" that he initially opposed government intervention
into the banking industry but that new developments in recent days
changed the circumstances.
      

Paulson said, "There's no doubt that the way to get the maximum
bang for the taxpayers here was to invest in banks."
      

Big banks have started getting behind a reconfigured federal
bailout plan that will have the government spending as much as $250
billion in exchange for partial ownership of some key banks.
      

President Bush, in announcing the plan Tuesday, declared that it
was "not intended to take over the free market but to preserve
it."
      

Paulson cautioned in Wednesday's interview that the process of
reinvigorating the struggling economy will take time and that some
problems, including rising joblessness, could continue in the short
term.
      

He said that people's jobs and retirement plans have been thrown
into jeopardy as a result of the tight credit conditions but also
said he was confident that "as we stabilize this system and as
banks begin to lend ... we will make progress."
      

"The folks at home should expect that we're going to have some
challenges for a number of months here," the secretary said.
      

"What I have said to the banks is, this is about making sure
that our healthy banks have plenty of capital," he said. "We have
the tools we need, we have the resources we need, and we're going
to meet this challenge .. like we have every other one."
      

Asked about a push in Congress for a new stimulus package to
help the economy, he said on CBS's "The Early Show" that he is
focused for now on "restoring confidence in the financial system,
and that will do more for the economy than any single thing. You
get banks lending going again, supporting businesses, supporting
jobs, supporting consumers, that's what we need to do."
      

Paulson also said the government's new steps did not merely
amount to an attempt to bail out Wall Street.
      

"This is only about the American people, only about Main
Street," he said. "The path we're taking is making sure that the
healthy banks have plenty of capital so that they're going to be
lending and we're going to have confidence in the system. But if
that doesn't work the way it should work, the people that are going
to pay the costs are going to be those on Main Street."
      

"This is about injecting confidence in the system, capital in
the system so that the financial system and the banks can resume
lending and help businesses raise the capital they need to support
jobs, help investors with their 401(k) plans, with their investment
plans," he said on NBC's "Today" show.
      

"I believe this is a major step toward restoring confidence in
our capital system, stabilizing our capital system, and - you're
right, that that is key," he said. "Doing this is the most
important thing we can do for our economy. If we can get this in
place and have it be successful, over time you're going to see
banks begin lending more and more to businesses. That's going to
help us with our jobs. That's going to do more to strengthen the
economy than any single thing we can do."
     

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Treasury Secretary Henry Paulson said
Wednesday he expects improvement in the condition of the economy
over time but that there will be "a bump in the road" along the
way.

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