Paulson says two lenders have enough funds

WASHINGTON, July 10 (UPI) -- U.S. Treasury Secretary Henry Paulson Jr. said Thursday two troubled, government-backed lenders have sufficient funds.

But The New York Times, citing sources in the Bush administration, said officials are considering placing one or both of the companies in conservatorship.

Regulators have said the Federal Home Loan Mortgage Corp. and the Federal National Mortgage Association, known as Freddie Mac and Fannie Mae, were "adequately capitalized," Paulson said in an appearance before the House Financial Services Committee.

The two lenders are "working through this challenging period," Paulson said.

The foreclosure crisis has hit both of them hard with share prices sliding and borrowing costs heading upward. If the government became the conservator, the shares would be worthless while taxpayers would bear the cost of defaulted loans, the Times said.