The Treasury Department, which recently received authority to help shore up Fannie Mae and Freddie Mac, hired Morgan Stanley to provide "market analysis and financial expertise" in connection with its rescue plan.

Congress recently agreed to allow the Treasury to provide an unlimited line of credit to the mortgage titans and take an equity stake in either company over the next 18 months. Treasury Secretary Henry Paulson has said he has no plans to use the agency's new authority but had asked for it to help reassure the markets.

Investors had been pummeling shares of the companies, which are critical to the housing market, over concerns that the companies lacked adequate capital.

The Treasury on Tuesday reiterated that it has no plans to use the authority. It said it retained Morgan Stanley to help it "analyze and understand these authorities, should circumstances ever warrant their use."

Morgan Stanley won't have access to Fannie's or Freddie's books and records, other than what is publicly available. The Wall Street bank will help the Treasury understand the companies' capital positions and help it decide whether -- and how -- to pull the trigger on using its new authority.

A spokeswoman for Morgan Stanley said the bank is giving up any involvement it has had advising Fannie and Freddie as part of this new assignment. Mr. Paulson called Morgan Stanley Chief Executive John Mack about the matter a couple of weeks ago, and the company submitted a proposal and got the mandate, she said. Robert Scully, a senior banker and a member of the Office of the Chairman at Morgan Stanley, will be the lead banker on the assignment.

The move comes as the Treasury beefs up its market expertise. W. Scott Frame, an economist and expert on Fannie Mae and Freddie Mac from the Federal Reserve Bank of Atlanta, is temporarily stationed at the Treasury Department; he started Tuesday. He has written studies on the risks posed by the two companies.

Morgan Stanley will receive $95,000 in exchange for providing its services through Jan. 17, 2009. The contract is set to expire on that date because Treasury didn't want to commit the next administration to the arrangement, a government official said.

"This action should be interpreted as a prudent preparedness measure and nothing more," the Treasury said. "Treasury does not, in its normal work, undertake these kinds of transactions."

--Aaron Lucchetti contributed to this article.

Write to Deborah Solomon at deborah.solomon@wsj.com and Damian Paletta at damian.paletta@wsj.com

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