Paulson and Bernanke defend bailout plans

US Treasury Secretary Henry Paulson has stressed government financial bailout money has to be used for the financial sector and not troubled US carmakers.

Paulson told a Congressional committee that is because of the unpredictable nature of the current financial crisis: “We saw what was happening to the economy, we talked about it, we took the (necessary) steps, the economy has continues to get worse.”

Not all the lawmakers agreed with Paulson’s use of the Troubled Asset Relief Programme, but Federal Reserve Chairman Ben Bernanke defended their approach: He said: “The value of the TARP in promoting financial stability has already been demonstrated; these actions, together with similar actions in many other countries, appeared to stabilise the situation and to improve investor confidence in financial firms.”

Bernanke helped boost Wall Street when he said that credit markets had steadied a bit after hefty interest rate cuts and massive injections of liquidity. But he added that they remain under considerable strain.