Paulson: Worst May Be Over in Months

Treasury Secretary Henry Paulson says he expects foreclosures and inventories of unsold homes to remain elevated into next year but that the worst of the housing correction could be over in the coming months. "I believe we can move through the bulk of the correction in months rather than years," he told financial services executive and lobbyists July 31 at the Exchequer Club in Washington. But to turn the corner, the Treasury secretary says the availability of affordable mortgage financing must be increased. He noted that the housing bill signed by the president strengthens supervision of Fannie Mae and Freddie Mac and grants their regulator new powers to set minimum capital requirements and address the risks posed by their $700 billion mortgage investment portfolios. "We have long sought this result, and our work is far from done," Mr. Paulson said. "All parties must get to work immediately to begin to address the systemic risk issues posed by the GSEs."