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Official calls bank system secure

However, IndyMac won't be the last to fail, Treasury's Paulson adds. He says overall stability is the priority.

July 21, 2008|Ken Bensinger and E. Scott Reckard | Times Staff Writers

Regulators have said they still hope to sell whatever remains of IndyMac within several months.

When the mortgage defaults and housing turmoil will subside is a matter of intense debate. Median housing prices have declined for 22 straight months, according to the National Assn. of Realtors. Meanwhile, a report released last week by Wachovia Corp. predicted that the bottom wouldn't come until mid-2009 at the earliest. By then, it said, prices will have fallen as much as 29% from their peak, or nearly three times the 11% slide to date.

"The current housing slump is without precedent, both in terms of breadth and magnitude," wrote Mark Vitner, senior economist at Wachovia.

Given such dire assessments, it's unclear how well the broader economy, including consumer spending and employment, will hold up. The U.S. economy has lost nearly 440,000 jobs this year, according to the Department of Labor, and the number of unemployed people rose to 8.5 million in June from 7 million a year earlier.

Yet Paulson said he expected the $152-billion economic stimulus package from the second quarter would have a positive effect. "I believe we're going to have 500,000 or 600,000 jobs we wouldn't otherwise have," he said. He didn't say whether those would be new jobs as opposed to jobs that would otherwise be lost.

The Democratic leadership in Congress has criticized the stimulus package as insufficient. House Speaker Nancy Pelosi (D-San Francisco) said last week that she was pressing for $50 billion in additional stimulus funding.


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