FLASHBACK: Six Months Ago, Paulson Said ‘Our Banks And Investment Banks Are Strong’
FLASHBACK: Six Months Ago, Paulson Said ‘Our Banks And Investment Banks Are Strong’
On Saturday, the Bush administration officially revealed its plan for a $700 billion bailout of troubled financial institutions. The New York Times called the plan “stunning for its stark simplicity,” and noted that the administration is “requesting unfettered authority for the Treasury Department.”
Yesterday, Think Progress pointed out that the Bush administration has a history of squandering taxpayer money, but that the bailout proposal has no oversight mechanism. And the man who would wield the “unfettered authority” is Treasury Secretary Henry Paulson, who, prior to the recent financial turmoil, consistently maintained that the U.S. banking system is “safe and sound.”
Last night, Paulson appeared on Fox News Sunday, where he was reminded of an interview six months ago in which he said “I’ve got great confidence in our financial market…Our institutions, our banks and investment banks, are strong.” Watch it:
Some are saying that we should simply trust Mr. Paulson, because he’s a smart guy who knows what he’s doing. But that’s only half true: he is a smart guy, but what, exactly, in the experience of the past year and a half — a period during which Mr. Paulson repeatedly declared the financial crisis “contained,” and then offered a series of unsuccessful fixes — justifies the belief that he knows what he’s doing? He’s making it up as he goes along, just like the rest of us.
Krugman added that, “basically, after having spent a year and a half telling everyone that things were under control, the Bush administration says that the sky is falling, and that to save the world we have to do exactly what it says now now now.”
However, an oversight mechanism is essential to ensure that the bailout benefits more than just the investment banking industry. As David Abromowitz and Andrew Jakabovics wrote for the Center for American Progress, “with appropriate oversight mechanisms, Congress and the public can monitor use of these authorities to ensure that America’s taxpayers, homeowners, and communities—not simply our investment firms—benefit from this extraordinary intervention and that the benefits are lasting.”
4 Responses to “FLASHBACK: Six Months Ago, Paulson Said ‘Our Banks And Investment Banks Are Strong’”
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Can anyone come up with one, just one, area where the Bush administration has been knowledgeable, and ahead of the historical curve in effecting a timely solution? (!)
September 22nd, 2008 at 12:01 pmAn “oversight mechanism” is essential, but what good will it do if the oversight is done by a Congress in the pay of those the oversight is aimed at? A new regulatory agency, or an existing agency blows with the political wind, as the heads are political appointees. Even bipartisan selection just anoints political hacks more interesting in status quo and lining their pockets.
This crisis is another indicator on how broken and corrupt our political system is and that representative government, as practiced today doesn’t work for the citizen!
September 22nd, 2008 at 12:10 pmVolatile credit derivatives went the wrong way in the last six months, but got wild this past week.
Unregulated products from unregulated investment banks led to their precipitious downfall, not poor people defaulting on mortgages.
The credit default swaps are extremely volatile, with the result that their market value and their liquidity may vary dramatically either up or down in short periods, and their ultimate value will therefore only be known upon their disposition.
Soaring credit default swaps led to the choke down in credit. The SEC is investigating. George Bush and Hank Paulson could buy these Wall Street Mafia protection like instruments as they’re “mortgage related securities.” Oh, and they may use your tax money!
September 22nd, 2008 at 12:16 pmWhy can’t the bushies use some of their faith-based reality to overcome our fact-based financial reality. Or, failing that, Bush himself should invest the balance of his 2004 election political capital; or, did he lose it all in his fight to privatize social security in the stock market?
September 22nd, 2008 at 3:26 pm