Responsibility for the current credit crisis rests firmly with mortgage lenders, US Treasury Secretary Henry Paulson has declared.
Stressing the resilience of the rest of the US economy, he said market turmoil would result in a two-speed recovery.
He forecast that the sub-prime sector, which extended loans to people with poor credit histories, would take up to two years to recover.
But Mr Paulson said the overall economic outlook was positive.
Lenders' liability
Mr Paulson called on mortgage lenders to help homeowners caught up in the credit crisis.
He stressed that "bad lending practices" should not provoke intervention by the US Treasury.
"I don't think it is the job of regulators to protect against these losses," he said.
Ripples from the credit crisis have begun to hit US hedge funds.
Buy-out specialist Kohlberg Kravis Roberts (KKR) is facing difficulties in finding buyers for loans to finance its $26bn (£12.8bn) takeover of corporate information group First Data.
It looks likely that KKR will have to agree to more challenging covenants - conditions on the loans - and higher returns than it had originally planned for.
The proposed loans sale would mark a vote of confidence in US financial markets, but the credit crunch has made such deals appear much less attractive to the banks.
And the Goldman Sachs-owned Global Alpha hedge fund saw its value fall by 22.5% in August on the back of currency and share trading losses.
Global Alpha made its name by relying on mathematical calculations to dictate its strategy.
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