WASHINGTON - TREASURY Secretary Henry Paulson said on Tuesday that he does not expect any more major financial institutions to fail during the current credit crisis.

Mr Paulson also said he has no current plans to ask Congress to make the second half of the $700 billion (S$1 trillion) financial rescue fund available before the Bush administration leaves office on Jan 20. But he added the administration was prepared to move quickly, if necessary, to tap the extra resources.

In an interview on CNBC television, Mr Paulson said he believes the actions taken by financial authorities in the United States and other countries will allow all the systemically important institutions to remain viable.

The administration has obligated almost all of the first $350 billion in the financial rescue package approved by Congress on Oct 3.

There had been speculation that the Bush administration would ask for approval to begin using the second $350 billion in the bailout bill before leaving office.

Mr Paulson said on Tuesday he believed the government had a 'lot of firepower' at its disposal currently, including the rescue programme and multibillion-dollar loan programmes being used by the Federal Reserve, the US central, and the Federal Deposit Insurance Corp. to stabilise the banking system.

The FDIC is the government agency that insures most bank accounts in the United States.

For that reason, he said he did not see a need to request authorisation from Congress to tap the second half of the rescue package, but he left the door open to making such a request if situations should change.

'I think if we have shown anything, we have shown that we know how to respond quickly to situations that come up,' Mr Paulson said.

'I am focused on it, but I think we have got what we need now.'

The Fed on Tuesday said it had reduced the federal funds rate, the interest that banks charge each other, to a range of zero to 0.25 per cent.

That is down from the 1 per cent target rate in effect since the last meeting in October. The aggressive move was greeted enthusiastically by Wall Street as the Dow Jones industrial average rose nearly 360 points.

Separately, the Treasury Department announced that it had provided an additional $2.45 billion (S$3.57 billion) in direct buys of bank stock involving 28 more banks.

The new group of banks brings to 116 those that have received government support through stock purchases.

The Bush administration announced in mid-October that the stock purchases would be the major way it planned to use $250 billion of the rescue programme. The amount distributed to the banks so far totals $167.76 billion, Treasury said.

In his interview, Mr Paulson said a top priority for his remaining weeks in office was to make sure the transition to the incoming administration of President-elect Barack Obama flows smoothly during what has turned out to be the country's most serious financial crisis since the 1930s.

The Bush administration is continuing to look at ways to deal with the mortgage crisis, Mr Paulson said, but had not yet decided to implement a proposal to try to boost housing activity by buying bonds and lowering mortgage rates to 4.5 per cent.

Paulson said he was spending a lot of time on the effort to fashion a government lifeline for the three major US auto companies.

The companies that need government loans to avoid bankruptcy 'will get the money as quickly as we can prudently do it', Mr Paulson said. 'We need to do it, but we need to do it right'.

Mr Paulson refused to speculate exactly when the support from the government's $700 billion rescue programme might be awarded to General Motors Corp, Chrysler LLC or Ford Motor Co.

He said the administration is working to make sure the treasury is protected and that the companies present a credible plan to achieve long-term viability. -- AP