Treasury secretary says global markets still strained

WASHINGTON -- Global financial markets remain severely strained, underscoring the need for quick action to implement the government's $700 billion rescue program, Treasury Secretary Henry Paulson said Wednesday.

Paulson said all the financial market turmoil has seriously affected the economy, but he said the administration is moving quickly to begin the largest government rescue effort in history.

He said even with this program to buy bad assets from financial institutions, some banks will fail. He also called for patience, saying "the turmoil will not end quickly and significant challenges remain ahead."

In an attempt to help stop the financial crisis from causing a global economic recession, the Federal Reserve and other central banks cut interest rates in a rare coordinated move Wednesday.

Paulson on Monday selected Neel Kashkari, 35, an assistant Treasury secretary, to be the interim head of the new program. In his remarks Wednesday, Paulson said the administration would move quickly to nominate someone to fill the job permanently. The post requires Senate confirmation.

Paulson said he was consulting with President Bush, congressional leaders and presidential candidates Sens. Barack Obama and John McCain before choosing someone to fill the job permanently. He said he would work with the Senate on the choice when lawmakers return in November.

The administration has been rushing to implement the program, which cleared Congress on Friday.

"Getting it right is as important as getting it done quickly," Paulson said, adding it would be several weeks before the program makes its first purchases of troubled assets.

"U.S. and global financial markets continue to be severely strained," Paulson said at the briefing called to preview the upcoming weekend meetings of finance officials of the Group of Seven major industrial countries and the 185-nation International Monetary Fund and the World Bank. The global credit crisis was expected to be the major agenda item at those talks.