By Jeannine Aversa

The Associated Press

WASHINGTON—The Bush administration will “do what it takes” to stabilize chaotic markets and minimize the economic damage, Treasury Secretary Henry Paulson said Sunday after a tumultuous week capped by the government rescue of a teetering investment bank.

All eyes now are on Wall Street as leading financial advisers prepared for a meeting today with President Bush and the Federal Reserve weighs another deep interest rate cut Tuesday to stem even more deterioration.

Paulson, in a series of news show appearances, defended the Federal Reserve’s extraordinary step Friday to provide emergency financing to one of Wall Street’s most venerable firms, Bear Stearns Cos. The central bank’s intervention was “the right decision,” he said.

The treasury chief sidestepped questions about what would have happened if the Fed had not ridden to the rescue, whether other firms are on shaky ground and the possibility of additional bailouts similar to Bear Stearns’.

At the same time, however, Paulson sought to send a calming message that the administration is on top of the turbulent situation. “The government is prepared to do what it takes to maintain the stability of our financial system,” he said. “That’s our priority.” Bush planned to meet today with his advisory panel on financial markets.

Bear Stearns and JPMorgan Chase & Co. were close to an emergency buyout deal Sunday night aimed at averting further panic in the financial markets.

Top executives from both companies were in 11th-hour talks about a deal that could sell Bear Stearns for a per share price that is likely to be “considerably less” than the $30 the stock closed at Friday, according to The Wall Street Journal.