Paulson: industry efforts, stimulus to aid housing

WASHINGTON (Reuters) - U.S. Treasury Secretary Henry Paulson said on Tuesday that private sector initiatives and an economic stimulus were better ways to deal with the housing downturn than a broad program to buy up distressed mortgages.

At a news conference to announce a new effort by mortgage firms to keep delinquent homeowners out of foreclosure, Paulson said a housing correction was necessary but there were plenty of federal institutions already in place to support housing.

"There's two ways of working your way out of a correction. One is that housing prices decline, and the other is that the economy keeps growing," Paulson said. "This is something we're working our way through. The president made the decision that we would focus on (private) programs like this, and in order to deal with the broader issue, we have a stimulus plan."

(Reporting by David Lawder, Editing by Chizu Nomiyama,)