Paulson Says Fannie-Freddie Plan Critical to Confidence in U.S. (John Brinsley)

  July 21 (Bloomberg) -- Treasury Secretary Henry Paulson suggested that U.S. lawmakers must pass his rescue plan for Fannie Mae and Freddie Mac to avert a slide in confidence in U.S. financial markets.

  International ``investors need to know that we in the United States understand how important these institutions are to the capital markets,'' Paulson said yesterday on CNN's ``Late Edition'' program. He separately declined to reject Democrats' calls for a second fiscal-stimulus package, as the effects of the first initiative wane.

  Paulson's remarks, on the eve of a two-day visit to Wall Street, indicate he's raising the stakes for lawmakers debating his proposed rescue. He reiterated his optimism that Congress will enact the plan, including potentially unlimited government investment in the firms that account for almost half the $12 trillion U.S. home-loan market.

  ``It sounds like a deal is going to get done,'' Robert Davis, executive vice president of the American Bankers Association in Washington. Paulson ``is not using his political capital to sell an unpopular program. It's a program that can get broad support even if it's controversial.''

  The Treasury chief, appearing on Sunday morning television shows in Washington for the first time since the government's rescue of Bear Stearns Cos. in March, said ``I don't want to speculate about a second stimulus package.''

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