INSTANT VIEW: Paulson offers no hint of GSE rescue

NEW YORK (Reuters) - U.S. Treasury Secretary Henry Paulson said on Friday that the Treasury Department's chief aim at present is to back government-sponsored mortgage buyers Fannie Mae and Freddie Mac in their "current form."

KEY POINTS: * "Today our primary focus is supporting Fannie Mae and Freddie Mac in their current form as they carry out their important mission," Paulson said in a statement issued in response to news stories about "contingency planning" on the fate of the major mortgage finance companies at Treasury. * Paulson's statement appeared at odds with a report in the New York Times that the Bush administration is considering plans to shut down and take over the mortgage enterprises, whose financial soundness has come into question amid a severe credit crunch and housing market downturn. * "We appreciate Congress' important efforts to complete legislation that will help promote confidence in these companies. We are maintaining a dialogue with regulators and with the companies," he said. * "OFHEO (The Office of Federal Housing Enterprise Oversight) will continue to work with the companies as they take the steps necessary to allow them to continue to perform their important public mission," he added.

COMMENTS:

OWEN FITZPATRICK, HEAD OF U.S. EQUITY GROUP, DEUTSCHE BANK

PRIVATE WEALTH MANAGEMENT, NEW YORK:

"It's hard to say what's going to happen with these two entities. Going into the weekend the markets are leery. Especially when you see transactions occur, it's too hard to say what's going to occur. The rumor mill has taken over to a large extent and the government and regulators are reacting to what's going on from that standpoint. These two companies are feeling a lot of pressure and I think it's wise on the part of the government to come out and make statements that they are going to support them in one way or another.

"I think it's (the statement) positive. Overall, if I'm a bond holder, it's obviously a big positive. If I'm an equity holder, I don't know. With equity holders there's still a lot of uncertainty out there even with a statement like that from Paulson."

KATHY LIEN, CHIEF STRATEGIST, DAILYFX.COM, NEW YORK:

"The market perceived Paulson's comments as bearish because unlike yesterday, he at least acknowledged today that Fannie and Freddie are facing some problems. There was also a lot of expectation built in the market about a possible bail out. People thought that if the government helped Bear Stearns, it would certainly step in for Fannie and Freddie."

PETER KENNY, MANAGING DIRECTOR, KNIGHT EQUITY MARKETS, JERSEY

CITY, NEW JERSEY:

"The bottom line is that we're in the middle of a financial Tsunami. This is a storm the likes of which this country hasn't seen."

"Paulson's comments were much anticipated by the market. The market right now needs to see results. It no longer gives anyone the benefit of the doubt."

STEPHEN SCHORK, EDITOR, THE SCHORK REPORT, PHILADELPHIA:

"This is fuel for the bullish fire, we are going to $150 (a barrel) on oil ...We are in bull market and a bull market that has been largely predicated on the weak dollar and more dollar weakness is going to be construed as bullish by the crude oil market."

T.J. MARTA, FIXED INCOME STRATEGIST, RBC CAPITAL MARKETS, NEW