Paulson: Fed made right decision to help Bear Stearns

Economists increasingly believe the spreading fallout from a severe credit crisis has pushed the U.S. into its first recession since 2001. The situation has led to record-high home foreclosures, forced financial companies to take multibillion losses from bad mortgage-linked investments and rocked Wall Street.

"No one is debating the fact that this economy has slowed way down," Paulson said. "We feel it, we know it, the American people know it."

The government's economic relief package, including tax rebates for people and tax breaks for businesses, should help bolster the economy later this year, Paulson said. He was cool to the need for additional economic stimulus, which is being promoted by Democrats in Congress.

Sen. Charles Schumer, a New York Democrat, accused President George W. Bush of not doing enough.

"The president is, indeed, behaving like Herbert Hoover. We're in the most serious economic problem we've been in in a very long time, much worse than 2001. The president's hands-off attitude is reminiscent of Herbert Hoover in 1929, in 1930," Schumer said. "There are lots of things that can be done, particularly on housing. Housing has been the bull's eye of this crisis."

Hoover, a Republican, was president at the time of the Oct. 29, 1929, stock market crash that marked the beginning of the Great Depression in the United States. The following decade was marked by high unemployment and deflation, but brought to power Democratic President Franklin D. Roosevelt in 1933 who introduced the New Deal economic reconstruction program.

Consultations about the Bear Stearns situation continued through the weekend among representatives from the Fed, Treasury Department, financial institutions and others.

President George W. Bush planned to meet on Monday with his advisory panel on financial markets, whose members include Fed Chairman Ben Bernanke and Paulson. The panel on Thursday recommended stricter regulation of mortgage lenders as part of a broad effort to prevent a repeat of a credit crisis threatening to drive the country into recession.

With the value of the dollar plunging, Paulson stuck to the position of past treasury chiefs when he said a strong dollar is in the national interest. The dollar has dropped to a new low against the euro and fallen sharply against the Japanese yen. That helps sales of U.S. exports to foreign buyers because it makes U.S. goods less expensive. But the drooping dollar increases inflationary pressures.

Paulson appeared on ABC television's "This Week," "Fox News Sunday" and "Late Edition" on CNN. Schumer was on Fox.

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