Treasury Secretary Defends Fed Move

Treasury Secretary Henry Paulson on Sunday defended the Federal Reserve's move to help Bear StearnsBSC stay afloat.

However, Paulson avoided directly answering questions about whether other financial firms were facing situations similar to Bear Stearns', according to the AP.

On Friday, Bear Stearns disclosed it was suffering from major liquidity problems and that JPMorgan ChaseJPM and the New York Fed had stepped in to rescue it. The news sent shock waves throughout Wall Street and sparked a stock selloff as traders and investors worried that if the firm failed, it could trigger a broader crisis in the already troubled financial system.

The Bush administration has said it's against government bailouts, but some critics contend the Fed's action Friday was just that, the AP noted.

"Well, every situation is different," Paulson was quoted saying by the AP. "We have to respond to the circumstances we're facing today. And my concern is to minimize the impact on the broader economy as we work our way through this situation, and again, the stability of our financial situation."

Paulson spoke in a series of broadcast interviews Sunday.

The Treasury secretary also said the financial system is "more fragile than we would like right now," the AP reported.

When asked whether other financial companies may have troubles similar to Bear Stearns', Paulson was quoted saying, "Well, our financial institutions, our banks and investments banks are very strong. And I'm convinced that they're going to come out of this situation very strong."

Bear Stearns was a big underwriter of mortgage-backed paper that has gone sour, and last summer two of its hedge funds, which had made big investments in mortgage-backed securities, blew up.

Shares of Bear Stearns plummeted $27.00, or 47.4%, Friday to close at $30.00.