updated 7/15/2008 1:59:33 PM ET 2008-07-15T17:59:33

Treasury Secretary Henry Paulson said Tuesday the Bush administration has no immediate plans to extend emergency loans to mortgage giants Fannie Mae and Freddie Mac or to purchase the stock of the two companies.

Paulson told the Senate Banking Committee that the assistance plan put together by the administration and the Federal Reserve over the weekend was intended to serve as a backup if needed.

He said that if the government extends any financial backing to the two institutions it will be done "under terms and conditions that protect the U.S. taxpayer."

Before Paulson's appearance, Sen. Jim Bunning, R-Ky., told Federal Reserve Chairman Ben Bernanke that he was very upset with the rescue package for Fannie and Freddie that had been unveiled on Sunday.

"The Treasury secretary is asking for a blank check to buy as much Fannie and Freddie debt as he wants for this unprecedented intervention in our free markets," Bunning said, questioning whether the government had gotten any assurances from the two mortgage giants that the problems they are facing will not be repeated.

Other senators, in their opening remarks, also expressed questions about what the administration was proposing. The administration is hoping that Congress will quickly pass legislation needed to put parts of its rescue proposal into effect.

Paulson in his remarks sought to assure lawmakers that what the administration is proposing will not put taxpayers at undue risk. He said the plan was necessary to help the nation's battered housing market get back on its feet and relieve stresses in financial markets where investors are worried about a rising tide of bad mortgage loans.

"Our plan is aimed at supporting the stability of financial markets, not just these two enterprises," Paulson said, referring to Fannie and Freddie. "This is consistent with Treasury's mission to promote the market stability, orderliness and liquidity necessary to support our economy."

Paulson said that it was essential for the government to put together a backup assistance package, given the important role the two companies play in supporting the housing market.

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