WASHINGTON — Treasury Secretary Henry Paulson Monday reiterated that his department is still aggressively examining new ways to stabilize financial markets, stem foreclosures, and boost the economy.

But the outgoing official also made clear that he plans to discuss any new initiatives with Congress and President-elect Barack Obama's team.

Paulson's comments come as fears of a severe, protracted global slowdown continue to mount.

"We are actively engaged in developing additional programs to strengthen our financial system so that lending flows into our economy," the secretary said, according to the text of a speech he plans to give at a business leader and policy expert forum in Washington. "When these programs are ready for implementation, we will discuss them with the Congress and the next Administration."

Paulson said Treasury also continues "to look at additional capital strategies." Still, Treasury will assess the impact of its first market rescue program in order to evaluate the size and focus of an additional program. Under the first program, Treasury committed $250 billion to purchasing stakes in various banks.

Meanwhile, Paulson said Treasury is still examining potential foreclosure mitigation ideas that could be funded through its $700 billion Troubled Asset Relief Program, or TARP.

"And of course, as we consider potential new TARP programs, we must also maintain flexibility and firepower for this Administration and the next, to address new challenges as they arise," Paulson continued.

Earlier Monday, a key academic group that tracks economic cycles officially declared that the U.S. economy has been in recession mode since this time last year. "The committee identified December 2007 as the peak month, after determining that the subsequent decline in economic activity weas large enough to qualify as a recession," wrote the National Bureau of Economic Research in a report made public on Monday. The peak marks the beginning of a recession.

"This downturn promises to be the worst since the Great Depression in the 1930's," said MFR Inc. Chief U.S. economist Joshua Shapiro in a research note.

Meanwhile, gloomy economic data indicated further slumping in the U.S. manufacturing and construction sectors.

Paulson Tuesday will head to Beijing for the meeting of the U.S.-China Strategic Economic Dialogue, or SED. The Bush administration launched the series of high-level talks with China in 2006 with Paulson's help. And now, the secretary is calling on the next administration to continue the discussions as a way to further improve U.S.-Chinese relations. His trip comes as China's yuan is declining, raising concerns that Chinese officials may now favor a weakening of the yen to bolster its economy and its exporters.

For three years, China — which sets the yuan's exchange rate on a daily basis — has allowed the currency to steadily gain ground against the dollar. But that appreciation has stalled recently.

Meanwhile, the ongoing credit crisis in the U.S. is continuing to require regulators' full attention despite several new creative programs and bailouts designed to revive financial markets.

Last week, Treasury, along with other federal regulators, announced a plan to rescue Citigroup Inc. Regulators agreed to inject $20 billion into the giant banking firm and back up to $306 billion worth of the bank's assets.

Additionally, federal officials Tuesday unveiled an $800 billion plan to boost consumer credit and the market for mortgage-related securities. Under that plan, the Fed will extend up to $200 billion in non-recourse loans to holders of asset-backed securities backed by highly-rated consumer and small business loans. The goal is to have the program running by February. Treasury has agreed to extend $20 billion in funds through its Troubled Asset Relief Program, or TARP, for the facility.

Also, the Fed said it would purchase up to $100 billion in GSE (government-sponsored enterprise) debt through a series of competitive auctions starting this week. The Fed also plans to purchase up to $500 billion in mortgage-backed securities backed by GSEs such as Fannie Mae and Freddie mac. Officials aim to have that program running in the next several weeks.

Meanwhile, Federal Reserve Chairman Ben Bernanke Monday indicated that officials stand ready to launch new liquidity programs to support the economy in addition to further slashing interests rates.

Bernanke said the central bank could directly purchase Treasury or agency securities on the open market and backstop liquidity to certain financial markets just like it's done in the commercial paper market.

Bernanke said the U.S. economy "remains under considerable stress" and that after contracting 0.5% at an annual rate in the third quarter, "economic activity appears to have downshifted" after September.

"Today we continue to work through a severe financial crisis," Paulson said in his afternoon speech. "While we are making progress, the journey ahead will continue to be a difficult one. But I have confidence that we are pursuing the right strategy to stabilize the financial system and support the flow of credit into our economy."

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