Treasury Secretary Henry Paulson waged a defence of the management of the $700bn financial bailout, just one week after the administration abandoned the original strategy behind the rescue.

"The rescue package was not intended to be an economic stimulus or an economic recovery package; it was intended to shore up the foundation of our economy by stabilising the financial system, and it is unrealistic to expect it to reverse the damage that had already been inflicted by the severity of the crisis," Paulson told the House Financial Services Committee.