Word: paulson
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...Paulson has reason to strut, and it's not just because he pushes around foreign governments and big bankers in his spare time, or that he has pictures of himself handling snakes decorating his office. The key reason he thinks he'll win this encounter with Congress is that this is one deal that really must get done. Last Thursday the great American credit panic of 2008 was on the verge of halting the country's financial circulatory system. Anyone with money to lend was hoarding it and big institutions were starting a run on the money market funds that...
...Henry Paulson is a very confident guy. Sitting in his office Wednesday morning before heading up for a second day of grilling in front of skeptical members of Congress, the Treasury Secretary seemed certain he'd get the massive new powers and huge sums of money he's asking for, despite the feverish horsetrading and recriminations still unfolding on the Hill. "I believe we're going to get a bill that works and a clean bill," he told TIME. "It certainly won't be exactly what we asked for, it never is, but it's got to be sufficient...
Only two things stopped the panic. One was Paulson's move to guarantee the money market funds with a special hoard of Treasury money usually reserved for stabilizing the dollar against other currencies. The other was the announcement Thursday night of the plan to lift the bad loans (and the myriad complex assets made up of them) out of the system and put them, at least temporarily, on the taxpayers' balance sheet. If the deal falls through, the panic will almost surely begin again...
...Paulson knows it. And that's why he's ready to play tough, like hinting that things are still dangerous and Congress, which has been informally debating add-on provisions like equity stakes in the Wall Street firms and new limits on executive compensation, doesn't have all the time in the world to act. "These markets are still very fragile and the conditions in the credit markets are very tight," he says. Asked whether ongoing negotiations on the Hill could spook markets, he says, "That obviously impacts the market and the markets are watching what's going...
...biggest problem Paulson faces, though, is that the American people don't seem to have understood that the crisis on Wall Street could spread to Main Street with very painful consequences. "We just haven't communicated as well as we need to," Paulson acknowelged this morning. "The average American looks at this as being about Wall Street, and they're angry, and I'm angry too. There have been huge excesses and flaws in the system, but the average American doesn't understand the implications this has for them: money needs to flow through the system so that every American...