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Paulson defended the government's role in coming to the aid of Bear Stearns, an action that has been criticized by some Democrats and others as akin to a federal bailout.

''Bear Stearns found itself facing bankruptcy,'' Paulson said. ''The Federal Reserve acted promptly to resolve the Bear Stearns situation and avoid a disorderly wind-down. It is the job of regulators to come together to address times such as this, and we did so. Our focus was the stability and orderliness of our financial markets.''

On the broader situation, he said it's too soon to conclude that other potentially important financial firms should have permanent access to the Fed. He also said the Federal Reserve's action so far ''should be viewed as a precedent only for unusual periods of turmoil.''

On Capitol Hill, some lawmakers were still skeptical about the Bear Stearns arrangement.

Max Baucus, D-Mont., the Senate Finance Committee chairman, and Charles E. Grassley of Iowa, the panel's top Republican, demanded details about the sale and any possible effect on taxpayers. The lawmakers asked Paulson and Fed Chairman Ben Bernanke to give them specifics of the transaction by week's end.

Chris Dodd, D-Conn., chairman of the Senate Banking Committee, summoned Paulson, Bernanke, Bear Stearns President Alan Schwartz and JP Morgan Chairman James Dimon and others to appear before his panel next Thursday to lay out the rationale behind the Bear Stearns takeover deal and its implications for taxpayers. The Fed originally agreed to guarantee $30 billion of Bear Stearns assets, including risky mortgage-backed securities. Under new terms reached earlier this week, JPMorgan said it will now take on the first $1 billion of losses, while the Fed backs the remaining $29 billion.

Those were signs that Congress, racing to deal with a housing mess that encapsulates voters' deep concerns about the economy, has placed the financial crisis at the top of the election-year agenda, with investigations and legislation likely to follow.

With home foreclosures at record highs, Paulson said the administration will explore additional ways to help distressed homeowners. But he was cool to some of the proposals put forth by Democrats, saying that ''most are not yet ready for the starting gate.''

Rep. Barney Frank, chairman of the House Financial Services Committee, wants new regulations on investment banks similar to those that apply to regular banks. That includes mandatory requirements for cash reserves to cushion losses. The Fed or another government entity should be designated as a ''financial services regulator'' with the power to limit risky practices, said Frank, D-Mass.

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Associated Press writer Julie Hirschfeld Davis contributed to this report.

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