Word: paulson
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...debate sharpens in the U.S. Congress over Treasury Secretary Henry Paulson's proposed $700 billion bailout package, Washington policymakers would be wise to lift their gaze beyond the Beltway and take a look at Sweden. That country has already been in this particular policy hell, during a banking crisis of its own in the early 1990s. "The basic conditions are the same," says Bo Lundgren, Sweden's Finance Minister at the time. "There was the same anxiety and the same need for confidence." He's one of a number of Swedish financial types who have been shuttling...
...Under the current plan being hawked by Paulson and the Bush administration, that astronomical sum would be used to buy up bad debt from ailing institutions in order to clean up their balance sheets. The criticisms of the plan are legion, but one irksome feature is that the banks that made the worst mistakes are in line to get the most help, providing little incentive for future managers to mend their ways. And all taxpayers would get for their rescue money is a mountain of toxic loans of highly dubious value...
...Tuesday's Senate Banking Committee hearing on the bailout may not reassure anyone. Paulson argued that the Bush Administration's plan is "the single most effective thing we can do to help homeowners, the American people, and stimulate our economy." And he stressed that despite fears on Capitol Hill, he does believe there should be some oversight of the unprecedented bailout. But Democrat Chris Dodd of Connecticut declared, "It is not just our economy at risk but our Constitution as well," while ranking minority member Richard Shelby of Alabama, a vocal critic of the plan, said, "I have long opposed...
...Paulson knows this as well as anyone. He and his team had been working on his proposal for more than six months, in the event that more piecemeal approaches like the bailout of Bear Stearns or the takeover of Fannie Mae and Freddie Mac didn't stop the bleeding. When things looked like they were headed for a crisis at the beginning of last week, he had a team up literally all night working with the Federal Reserve to frame a deliberately vague proposal that could make it through Congress. The key issue was to get something that could pass...
...typically heightened rhetoric, went so far as to call the proposal "un-American." And a group on the left will oppose it because they see it as a bailout for Wall Street executives (and because they're from securely blue districts or states). But it seems clear that Paulson and Bernanke managed to hit the mark with their three pages. And even if dozens more are eventually added to sweeten the pot for important constituents with powerful lobbyists, the core of the project will remain the same. It's what members of Congress do, even if, as the GOP staffer...