Word: paulson
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...this $700 billion that Treasury Secretary Hank Paulson wants--it sounds like a lot. But then so does the $400 billion annual deficit that the Federal Government was already heading for before this new thing came along. And yet that didn't seem to have any real-life effect either. Nor have any of the other gargantuan numbers that have floated past us in the generation since Ronald Reagan declared in his first Inaugural Address that society is like a family and has to live within its means. We took this as an invitation for our families to start borrowing...
...bubble. In fact, constantly rising real estate prices seems to be regarded as some kind of natural right, or at least a natural state to which we must return as soon as possible. Getting prices "moving again"--which means moving higher--is one all-but-explicit goal of the Paulson bailout. If house prices head back up, fewer mortgages will exceed the value of the asset that backs them up, foreclosures will drop, and bankers will be willing to lend again. More generally, in a nation of homeowners, people will get back that cozy feeling that they are getting richer...
...largest government bailout in U.S. history was born before dawn on Sept. 17, when Federal Reserve Chairman Ben Bernanke woke up at 6 a.m., checked his BlackBerry and saw the very thing he had dreaded: the futures market in free fall. Bernanke, Treasury Secretary Henry Paulson and New York Fed president Timothy Geithner had spent the past year staving off one disaster after another, for the most part working behind the scenes. Earlier in the month, they had let investment bank Lehman Brothers slide into oblivion and then ushered another, Merrill Lynch, into the arms of Bank of America. Just...
...after that? Think the unthinkable. On Sept. 18, Paulson and Bernanke laid out the dark scenario for stunned-silent congressional leaders: a stock-market crash, businesses going under, unemployment soaring, consumers unable to get so much as a car loan, banks failing so fast that they would quickly drain the federal deposit insurance fund--and with it, countless people's life savings. And unlike the chain reaction that came over the course of weeks and months in 1929, this one would happen in a matter of days, if not faster. "The chain reaction," said Paulson, "is quicker than...
...Paulson and Bernanke asked for the world--and warned lawmakers they had only a few days to deliver it. Treasury needed $700 billion to buy up Wall Street's toxic mortgage-backed assets, which the government would eventually repackage and sell when the real estate market recovers, and a crisis might be averted. The proposal was simple, only three pages long. "Ben, Tim and I had talked for months about how there might be a need to do something like this, discussed the various plans," Paulson told TIME on Sept. 24. "The one thing we knew was that we couldn...