Treasury Secretary Henry Paulson said Thursday that US mortgage finance giants Fannie Mae and Freddie Mac are "adequately capitalized" in the face of a "challenging period."
Paulson's comments before Congress came amid growing market fears amid speculation that the two government chartered, shareholder-owned finance firms with trillions of dollars in their portfolios could be in trouble.
Speaking to the House Committee on Financial Services, Paulson said Fannie and Freddie are "working through this challenging period" of a horrific housing slump that has hit credit markets.
The two firms "play an important role in our housing markets today and need to play an important role in the future," he said.
"Their regulator has made clear that they are adequately capitalized."
The comments came amid a massive slump in the shares of both firms. A report Thursday in the Wall Street Journal said the Bush administration has held talks about what to do in the event the two firms falter.
The daily said the discussions have been going on for months as part of normal contingency planning but had become more serious recently.
The two firms, which have no explicit government backing despite their government charter, provide liquidity to the housing market by buying mortgages and repackaging them in securities sold to investors.
