Economy 'stable and improving'

WASHINGTON, D.C. (NBC) - Treasury Secretary Henry Paulson said Wednesday the government's financial rescue has worked and that the economy is stable and improving, but the $700 billion Congress approved to rescue America's financial system is taking a new focus. There is still the question if whether the auto industry will get bailout help as well.

Buying stocks in banks, providing credit and rescuing Freddie Mac and Fannie Mae made a difference. The bailout program was sold with the promise of buying bad mortgage debt when the economy was at a tipping point, but Paulson said based on the economy's decline, that is no longer the best way to save it.

"Our system is stronger and more stable than just a few weeks ago," said Paulson. "Although this is a major accomplishment, we have many challenges ahead of us."

Among the challenges is rescuing millions of homeowners from foreclosure. Congress is looking at what the private sector can do. There is concern about helping those who took deliberate risks, but some experts said at this point, the government has no choice.

"If the test is anybody who made a mistake, there's going to be no help, the economy will crumble," said Rep. Sander Levin of Michigan.

The auto industry is at a crossroads and is asking the government for billions to stay afloat. Because automakers are asking for help after banks did, some lawmakers want to know what is next.

"I'm afraid if we don't answer the question very soon, 'When does it stop?,' it's going to stop when we run out of money," said Rep. Spencer Bachus of Alabama.

Yet, Paulson said he is looking at using the rest of the financial rescue funds to help not just banks but other industries that provide credit such as auto loans, credit cards and student loans. He also said they will step up the effort to prevent foreclosures. As for whether the government will bail out automakers, Paulson did not provide a clear answer, saying it depends on whether that help would fix the problem long-term.