Paulson says US financial rescue package not a panacea

"The purpose of the financial rescue legislation was to stabilize our financial system and to strengthen it. It is not a panacea for all our economic difficulties, Paulson said at a hearing of the House of Representatives Financial Services Committee.Paulson, Federal Reserve chairman Ben Bernanke and Federal Deposit Insurance Corporation chairwoman Sheila Bair were called to testify before the House panel about the 700 billion dollar Troubled Asset Relief Program (TARP) authorized by Congress on October 3.Amid growing calls for rescue of ailing automakers, the Democratic-controlled Congress opened a "lame duck" session Monday vowing to fight for a new loan program for the auto industry.The chairmen and chief executives of General Motors, Ford and Chrysler were to plead their case Tuesday before the Senate Banking, Housing and Urban Affairs Committee.Paulson acknowledged the spillover from the global financial crisis was battering the economy, but stressed the rescue focus should remain on the financial sector."The crisis in our financial system had already spilled over into our economy and hurt it. It will take a while to get lending going and repair our financial system, which is essential to an economic recovery,"An economic recovery "won't happen as fast as any of us would like, but it will happen much, much faster than it would have had we not used the TARP to stabilize our system," Paulson said.Paulson said in an interview Monday he would likely leave the remainder of the 700 billion dollar bailout fund for the incoming administration of president-elect Barack Obama.The Wall Street Journal quoted Paulson as saying he would probably not tap the remaining 410 billion dollars of the rescue fund to launch any substantial new programs."I'm going to do what we need to do to keep the system strong but I'm not going to be looking to start up new things unless they're necessary, unless they make great sense," Paulson told the newspaper."I want to preserve the firepower, the flexibility we have now and those that come after us will have."His preference to keep some money in reserve means many of the big decisions about how to use the fund, such as helping to stem a tide of foreclosures, will be delayed until Obama takes office on January 20.Of the 700 billion dollars authorized by Congress, 290 dollars has been disbursed.