WASHINGTON (Reuters) - Treasury Secretary Henry Paulson said on Tuesday he expects to see consolidation within the stressed U.S. banking industry and indicated he sees that as positive, according to Bloomberg Television.
Paulson was interviewed on PBS for a program to be aired on Tuesday and Bloomberg had early access to the interview.
"There will be some situations where it's best for the economy and for the banking system for there to be a consolidation," Paulson was quoted as saying by Bloomberg.
Treasury is in the process of pumping $250 billion into the banking system to boost capital and spur lending and Paulson said the money was going to healthy banks, not ailing ones.
The money that Treasury is using to add to banks' capitalization is part of a broader $700-billion bailout that Congress approved for financial firms after credit flows virtually seized up, posing a threat to the broader economy.
Paulson said there were signs that the credit freeze -- which affected not only loans to consumers and businesses but also lending between banks -- was beginning to thaw after a round of measures by Treasury and the U.S. Federal Reserve to boost liquidity and try to bolster market confidence.
The U.S. Treasury chief was in New York to speak to the National Committee on U.S.-China Relations and earlier met chief executive officers at the New York Stock Exchange for discussions about the economy and about actions Treasury is taking to spur lending.
In addition to recapitalizing banks, Treasury is making plans to buy unwanted and illiquid assets from banks in order to help cleanse their balance sheets.
(Reporting by Glenn Somerville; Editing by James Dalgleish)
