Paulson Sees Credit Crisis Easing

Treasury Secretary Henry Paulson said the "worst is likely to be behind us" in the lingering credit crunch in an interview published Wednesday in The Wall Street Journal.

Paulson said it would take several months more to sort out the full effects of the credit markets' disruptions that began last summer and further "bumps along the road" remain, the Journal said.

But he pointed to actions by the Federal Reserve -- including the central bank's aid to JPMorgan Chase(JPM Quote - Cramer on JPM - Stock Picks) in buying a near-bankrupt Bear Stearns(BSC Quote - Cramer on BSC - Stock Picks) in March and unprecedented actions to provide liquidity to commercial and investment banks -- as soothing to the markets, the paper said.

On the political front, Paulson urged Congress to approve legislation improving the regulation of government-sponsored mortgage lenders Fannie Mae(FNM Quote - Cramer on FNM - Stock Picks) and Freddie Mac(FRE Quote - Cramer on FRE - Stock Picks), the Journal reported.

That comes as the White House signaled it would veto a bill sponsored by Democrats that would provide Federal Housing Administration insurance for $300 billion in troubled mortgages.

Treasury also met with about 10 home lenders, including Countrywide Financial(CFC Quote - Cramer on CFC - Stock Picks), Bank of America(BAC Quote - Cramer on BAC - Stock Picks) and Citigroup(C Quote - Cramer on C - Stock Picks) to urge them to standardize voluntary procedures for helping qualified borrowers modify existing mortgages into more affordable terms, the Journal reported Tuesday.