Treasury Secretary Henry Paulson said Tuesday the unfolding housing crisis posed a significant risk to the economy and called for Congress and private mortgage companies to move more quickly to help.

But Democrats in Congress said it was the Bush administration that is moving too slowly. They said the latest proposals from Paulson fell far short of what is needed to deal with the prospect of as many as 2 million families losing their homes over the next two years as their adjustable-rate mortgages reset to much higher monthly payments.

In a speech at Georgetown University's law school, Paulson said the financial industry should provide immediate help for homeowners trying to refinance to more affordable mortgages. He also called for an overhaul of laws and regulations governing mortgage lending to halt abusive practices that contributed to the current crisis.

"Let me be clear, despite strong economic fundamentals, the housing decline is still unfolding, and I view it as the most significant current risk to our economy," Paulson said in his most somber assessment of the crisis to date. "The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth."

On Monday, the nation's three biggest banks announced the creation of a fund with up to $100 billion in resources to buy troubled assets such as mortgage-backed securities. Treasury Department officials participated in the behind-the-scenes discussions that led to creation of the fund, but no government resources have been pledged to the effort.

Democrats, who are pushing for a bigger government role in resolving the crisis, believe if the administration does not act more forcefully the mounting foreclosures could become a major issue in next year's presidential campaign.

"Millions of American homeowners are getting crunched by ticking-time-bomb mortgages and they have yet to see their government take the necessary action," said Sen. Robert Menendez, D-N.J. "It seems that every bold action this administration has taken has been to soften the blow for investors."

Sen. Charles Schumer, D-N.Y., said that since Aug. 21 when Paulson said he believed the mortgage problems would sort themselves out, there have been an additional 400,000 home foreclosure filings.

"Every week, the administration moves closer to what many of us say is needed, but they do it so slowly, so haltingly, that they keep falling behind," he said in an interview with reporters.

Underscoring the soaring level of foreclosures, the Government Accountability Office released a new report showing that as of June 2007 more than 1 million mortgages were in default or foreclosure, an increase of 50 percent from two years ago.

In his speech, Paulson said the government must balance the need to help homeowners stay in their homes against the threat that government rescue efforts could encourage investors to make risky decisions in the future. "I have no interest in bailing out lenders or property speculators," he said.

Federal Reserve Chairman Ben Bernanke said Monday the housing problem would be a "significant drag" on economic growth into next year and that it would take time for Wall Street to fully recover from a significant credit crunch.

In August, financial markets around the world were roiled by the worst credit crisis in nearly a decade as investors became worried about rising defaults in the mortgage market, causing credit to dry up in a number of markets including the market for commercial paper, short-term loans used extensively by businesses.

At the time, Paulson insisted the country would be able to work through the problems without any lingering adverse effects. However, as the extent of the troubles in subprime mortgages has grown and the housing slump has deepened, the administration has worked to increase its efforts.

Paulson said in his speech that it was crucial for mortgage companies to move more quickly with an effort dubbed Hope Now to boost the number of homeowners who can be reached with credit counseling and help in refinancing to mortgages they can afford.

"This is not about finger-pointing; it is about putting an aggressive plan together and moving forward," he said.

To help in the process, U.S. Treasurer Anna Cabral will hold a series of information sessions in cities facing the highest foreclosure rates in an effort to publicize ways homeowners can get help.

"We are adding our support to amplify the message that families need to pay attention to the notices they are getting in the mail about the potential reset of their mortgages," Cabral said in an interview with The Associated Press from Detroit, where the first session was held Tuesday. Future sessions are planned for Cleveland, San Antonio, Orlando, Miami and Los Angeles.

Paulson said Congress had a role to play by acting quickly to pass an overhaul of the Federal Housing Administration that would make affordable FHA-insured loans more widely available. He also called for speedy resolution of the issues that have held up passage of legislation to boost oversight of government-sponsored enterprises Fannie Mae and Freddie Mac, the nation's two big players in the mortgage market.

Paulson said the administration was also conducting a review of the government's structure for regulating financial institutions with a major goal of improving the way the mortgage industry is regulated.

"This patchwork structure should be streamlined and modernized," he said.