Treasury chief Paulson on verge of historic new powers

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Source: Christian Science Monitor

Washington - In recent weeks Henry Paulson Jr. has become one of the most famous and, perhaps, consequential US Treasury secretaries since Alexander Hamilton assumed the office on Sept. 11, 1789.

Secretary Paulson is not the sole architect of the Bush administration's bailout strategy for the US economy, of course. By all accounts he is part of a troika of top policymakers with Federal Reserve Chairman Ben Bernanke and New York Fed Chief Timothy Geithner.

But as the public face and dealmaker of the plan, Paulson is the one most in the spotlight. Moreover, bailout legislation submitted to Congress by the White House over the weekend would transform Paulson's office into that of temporary overseer of America's entire financial system.

This may not be the role that former Goldman Sachs head Paulson envisioned when he signed on as President Bush's third Treasury chief.

"But he has to do this. He has no choice," says Peter Morici, a business professor at the University of Maryland and the former chief economist at the US International Trade Commission.

The proposed expanded powers for the Treasury secretary are one aspect of the Bush bailout plan that has drawn criticism from Democratic members of Congress.

Under the proposal, the United States Treasury would have the power to buy virtually any financial instrument from any institution, as a means to relieve it of bad assets and pump credit back into the economy. New Treasury staff would help manage this program, although the administration foresees contracting with private firms to manage its new asset holdings.
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The primary role of the Treasury is financing the operations of the US government, and that is helped if the department head understands the key role confidence and capital flows play in financial markets, says Mr. Bartlett.

Read more: http://news.yahoo.com/s/csm/20080923/ts_csm/apaulson

[Frisbee]

1. They're ramming this through...

just like they did with the war in Iraq. By using fear. I caught the news at the top of the hours and heard a clip of Paulson basically saying "if you don't pass this now, exactly as it is, there will be dire consequences for the economy." I call BULLSHIT. Let the Congress take the time to discuss it and come up with a reasonable version WITH OVERSIGHT. There is now way in hell anyone from the Bush administration should EVER be trusted with the kind of power they are trying to grab here. It is time Congress tells them to take their fear tactics and shove them were the sun don't shine.

[Zuiderelle]

2. I watched a little of Schumer questioning him, and he had some VERY good questions...

like ... if you aren't going to use the money all at once, why wouldn't we just give you $150 billion now and then reassess it in January whether you need more? He really couldn't answer that question. A bunch of hemming and hawing and no answer. Very good question though.

[Just-plain-Kathy]

3. I have has C-span2 on for most of the day....

...Paulson said something like, 'this is so complicated, we didn't even understand it'. ...Go figure.


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My husband sent me this e-mail earlier...

Listening to the radio on the way in this morning a number of 1.5 million foreclosures was put out as a number from Fannie/Freddie. Even if that number is conservative and you triple it and multiply by 1 million for each foreclosure you are only looking at 4.5 million dollars! How the hell do they come off asking for 700 billion!

[JerseygirlCT]

8. So... he doesn't understand it, but we should hand him a trillion

bucks while he figures it out?

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9. Dollars?

Tripling 1.5 million foreclosures would give you 4.5 million foreclosures, but not 4.5 million dollars. If we just guessed $300k/home, that'd be 135 BILLION but still, that would mean totally buying out the home.

I thought the point was to restructure the homes so they were affordable. But if the government is going to take them over altogether, yes, it's way under $700 billion, but we don't know what else is in there - bonuses aside, what about commercial properties in foreclosure? How about some heavily financed developments where the builder financed the construction only to not be able to sell the things due to the real estate crash. Those things are probably left out of the foreclosure count, but I'm sure if you add them in we get a lot closer toward the asking price.

I'm not advocating paying the $700 billion, but just quibbling with the math - the numbers have to be right (in the real world) before you can make a plausible argument.

[Raster]

4. I agree that there needs to be immediate action, just not the blind action prescribed by Paulson.

It is time for the nation's best and brightest finance and economy minds to come together to RATIONALLY appraise this crisis and come to the American people with some solid, articulate answers. No more "trust us, we've got you covered." In case you haven't been paying attention, that's what got us to this clusterfuck in the first place.

[llmart]

7. This debacle didn't happen overnight.......

and we're not going to fix it overnight so what's the hurry? They're playing the fear card again. We need the cooler minds in Congress to prevail over anyone on Bush's side.

[Raster]

11. Abso-fucking-lutely! Fear is the tool most employed by despots.

We need to overhaul our nation's financial system in its entirety. This is only a symptom of the greater malaise. And the cheney*/bush* band of thugs have only made it worse.

And any fucking bailout/deal needs to come with Gramm and Greenspans nuts nailed to the wall.

[Javaman]

5. help us...

we were treated with more feigned consternation yet again by our kabuki congress.

will this bullshit have oversight? probably not.

will anyone that committed the enroning of a nation be held accountable? probably not.

will the average person see any benefit from this corporate welfare golden parachute? absolutely not.

will there be rich fuckers laughing all the way to their swiss banks with their pockets full of our money????
you bet your sweat ass they will.

[Buenaventura]

6. if paulson's another hamilton perhaps we need another burr

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10. I'm confused on a couple of points

(like I should join the club)

Dr. Susskind from Princeton, interviewed on Bill Maher the other night (Friday?) said basically no one really understands, but all we've really done is ward off an immediate meltdown.

I've heard a variety of names (well known, and those that I trust), including Bill Clinton (yesterday morning) say that actually this is good, we might make money and could at least strenghen it, overpriced bonuses aside. It would also get Goldman Sachs (not that I cry for them), and the others, out of this derivatives business or whatever it's called and force them to operate under bank rules in some degree, at least as far as picking up mortgages goes, forcing them to keep certain percentages of money available and all the other banky things and rules that banks have to operate under.

So, some good people that I put beyond reproach say it's not a bad deal, others are scared shitless, and most say they have no idea what they're doing, but we have to do something, so here it is - if you don't like it, come up with a better idea - but no one is getting any airtime with better ideas (not sure if that means there are no better ideas, or they're just being supressed).

[Joe Chi Minh]

12. they gave the impression that was something they were not going to do.

If they do, on all known Neocon form, it will presage the absolute end.

For that reason, and because the Democrats are now in the box seat, I can't see them making him a plenipotentiary in the financial sphere, with the same kind of "executive" powers Bush has arrogated to himself.