US Treasury boss: Doing nothing is not an option

US Treasury Secretary Henry Paulson said today the country had no option but to put in place an expensive and bold rescue plan to save the economy.

He said the cost of doing nothing and failing to take the bad assets off the books of financial organisations would be far more.

Mr Paulson said that he planned to work through the weekend with congressional leaders to reach agreement on a plan that would address the root problems of the financial crisis gripping the United States.

Speaking at the Treasury Department, Mr Paulson said that the new troubled-asset relief program that he wants Congress to enact must be large enough to have the necessary impact while protecting taxpayers as much as possible.

“I am convinced that this bold approach will cost American families far less than the alternative – a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion,” Mr Paulson said in a prepared statement.

“The financial security of all Americans ... depends on our ability to restore our financial institutions to a sound footing,” he said.

Mr Paulson said mortgage giants Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities to help provide support to the crippled housing market.

He added that the Treasury will expand a programme, announced earlier this month, to buy mortgage-backed securities, which have been badly hurt by the housing and credit crisis.