Treasury Secretary Henry Paulson said on Tuesday financial markets will remain under stress until the U.S. housing market's slide ends and called the health of mortgage finance enterprises vital to the recovery of the U.S. economy.

Paulson said restoring confidence in government-sponsored finance giants Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) is crucial to stabilizing markets rattled by a year-old credit crunch and a sharp fall in home values.