WASHINGTON — The Treasury Department will work with Congress and state and local governments in the coming weeks to devise specific subprime mortgage relief measures that are likely to include an increase in the annual private-activity bond volume cap for expanded mortgage revenue bond issuance, a department official said yesterday.

Treasury Secretary Henry Paulson said Monday that the department is “aggressively pursuing a comprehensive plan” to minimize the impact of the housing downturn on the U.S. economy and that Congress needs to act “to temporarily increase capacity and allow state and local governments new flexibility to use tax-exempt bonds for home mortgage refinancings.”

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