And how long after that did Hank ride off into the sunset?Paulson either lied or was wrong about EVERYTHING pertaining to the financial meltdown leading up to his "emergency." With his time almost out, he knew it was now or never.
We're supposed to believe the only possible way out of this "freeze" was for the gubbamint to hand over the keys to the safe???
And Congress said "no problem", even after having some time to mull it over.
They should all be hung by their sacs at some new attraction in Disney World.
Haven't thought of a name yet, but I will
-----
Notable statements
In Spring 2007, Secretary Paulson told an audience at the Shanghai Futures Exchange that "An open, competitive, and liberalized financial market can effectively allocate scarce resources in a manner that promotes stability and prosperity far better than governmental intervention."[19]
In August 2007, Secretary Paulson explained that U.S. subprime mortgage fallout remained largely contained due to the strongest global economy in decades.[20]
On July 20, 2008, after the failure of Indymac Bank, Paulson reassured the public by saying, “it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation.”[21]
On August 10, 2008, Secretary Paulson told NBC’s Meet the Press that he had no plans to inject any capital into Fannie Mae or Freddie Mac.[22] On September 7, 2008, both Fannie Mae and Freddie Mac went into conservatorship.[23]
[edit] Credit Crisis of 2007-2009
[edit] Lehman's bankruptcy
The support given by Federal Reserve Board, Under Ben Bernake and Treasury, with Paulson at helm, in acquiring of Bear Stearns by J.P Morgan and $200bn facility made available to Fannie Mae and Freddie Mac. There was a great deal of criticism of this decision in congress by both Republicans and Democrats. [24] When Barclay's Bank required support for acquiring Lehman Brothers, both Geithner and Paulson were reluctant. Instead, they pressured Lehman's into chapter 11 bankruptcy, believing the effect wasn't systemic. [25]
"Well, as you know, we're working through a difficult period in our financial markets right now as we work off some of the past excesses. But the American people can remain confident in the soundness and the resilience of our financial system." [26]
This proved to be a colossal miscalculation, as the money markets began to free-fall between September 15, 2008 and September 19, 2008.
[edit] U.S. government economic bailout of 2008
Paulson was the designated leader of the Bush Administration's efforts in 2008 to nationalize the cost of bad loans made by financial institutions.
Through unprecedented intervention by the U.S. Treasury, Paulson led government efforts which he said were aimed at avoiding a severe economic slowdown. He pushed through the conservatorship of government agency mortgage giants Fannie Mae and Freddie Mac. Working with Federal Reserve Chairman Ben Bernanke, he influenced the decision to create a credit facility (bridge loan & warrants) of US$85 billion to American International Group so it would avoid filing bankruptcy.
In late September 2008, Paulson, along with Bernanke, led the effort to help financial firms by agreeing to use US$700 billion dollars to purchase bad debt they had incurred.[27] He faced criticism from economists for initially refusing to consider injecting large amounts of cash into financial institutions directly by purchasing stock, an option which other countries in similar circumstances had pursued.[28] This was the option favored by Bernanke, and the one that was eventually followed.[29]
On September 19, 2008, Paulson called for the U.S. government to use hundreds of billions of Treasury dollars to help financial firms clean up nonperforming mortgages threatening the liquidity of those firms.[30] Because of his leadership and public appearances on this issue, the press labeled these measures the "Paulson financial rescue plan" or simply the Paulson Plan.[31]
With the passage of H.R. 1424, Paulson became the manager of the United States Emergency Economic Stabilization fund.
As Treasury Secretary, he also sat on the newly established Financial Stability Oversight Board that oversees the Troubled Assets Relief Program.
Documents obtained by government watchdog group Judicial Watch reveal that in an October 13, 2008, meeting with executives from 9 major American banks, Paulson told bankers that they would be forced to accept government bailout money, whether they wanted it or not.[32] One of the documents, a talking points memo, gave bankers the ultimatum: "If a capital infusion is not appealing, you should be aware that your regulator will require it in any circumstance." The logic was that if everybody were forced to accept the money, then doing so would destigmatize the process in an attempt to avoid threatening the already-eroded market confidence in some of the weaker banks.
During the financial crisis, Paulson found time to enjoy a ski vacation in Colorado, where he conducted work involving the nation’s financial crisis over the telephone. [33]
[edit] Conflict of interest claims
It has been pointed out that Paulson's plan could potentially have some conflicts of interest, since Paulson was a former CEO of Goldman Sachs, a firm that may benefit largely from the plan. Economic columnists called for more scrutiny of his actions.[34] Questions remain about Paulson's interest, despite the fact that he had no direct financial interest in Goldman, since he had sold his entire stake in the firm prior to becoming Treasury Secretary, pursuant to ethics law.[35] The Goldman Sachs benefit from AIG bailout was recently estimated as USD 12.9 billion and GS was the largest recipient of the public funds from AIG.[36] Creating the collateralized debt obligations (CDO's) forming the basis of the current crisis was an active part of Goldman Sach's business during Paulson's tenure as CEO. Opponents[who?] argued that Paulson remained a Wall Street insider who maintained close friendships with higher-ups of the bailout beneficiaries. [citation needed] If passed into law as originally written, the proposed bill would have given the United States Treasury Secretary unprecedented powers over the economic and financial life of the U.S. Section 8 of Paulson’s original plan stated: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."[37] Some time after the passage of a rewritten bill, the press reported that the Treasury was now proposing to use these funds ($700 billion) in ways other than what was originally intended in the bill.[38] |
