US Treasury Secretary Henry Paulson has said he believes the financial crisis is coming to an end but society could take some time to fully emerge from the malaise.

In a Washington speech to business leaders, Paulson said: “I expect that financial markets will be driven less by the recent turmoil and more by broader economic conditions and, specifically, by the recovery of the housing sector.'

Paulson, a former chief executive of Wall Street investment bank Goldman Sachs, said investors would need to re-evaluate the risks before they could regain confidence in the markets.

The Treasury chief also warned that the correction in the housing sector that began two years ago would not be resolved quickly.

He said: “ We should not be surprised at headlines that note rising foreclosures and falling home prices. There is no silver bullet to undo the lax underwriting practices of recent years.”