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On November 12, 2008, in his never ending quest to show that he remains solidly behind the curve, Treasury Secretary Paulson announced that no bailout monies would be used to buy up toxic assets.
During the two weeks that Congress considered the legislation, market conditions worsened considerably. It was clear to me by the time the bill was signed on October 3rd that we needed to act quickly and forcefully, and that purchasing troubled assets – our initial focus – would take time to implement and would not be sufficient given the severity of the problem.
And later
Over these past weeks we have continued to examine the relative benefits of purchasing illiquid mortgage-related assets. Our assessment at this time is that this is not the most effective way to use TARP funds
What you need to keep in mind is that buying up toxic assets was the raison d’être of the Paulson plan. It’s why Congress gave him the $700 billion. It’s what the TARP (the Troubled Asset Relief Program) mentioned above refers to. He had to have it he said or the financial system would collapse. Even at the time he was warned by many that it was a supremely bad idea, and after kicking it around for nearly two months, he now agrees but makes it sound like he had questions about it from the beginning. He didn’t. This typifies the Paulson style: absolute confidence coupled with a refusal to address or even acknowledge core problems. He dithers, gets it wrong, and even when he stumbles or is pushed in the right direction he embraces a solution that is totally inadequate. In other words, Paulson is very much part of the problem, not part of the solution. His leadership wastes time and money we do not have.
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Follow the money. Paulson should be forced to account for every cent of our money that he doles out to his buddies.
It’s really too bad he’s shielded from prosecution for fraud. Anyone pulling this stunt in the private sector would be in jail by now. He went out and raised $700 billion in capital and now says he won’t use it for the purpose under which he raised it.
Thanks very much Hugh.
digg
maybe the toxic assets paulson wanted to buy have all been used as collateral for those fed loans bernanke doesn’t want to tell us about?
That’s it. The Fed allowed banks to dump toxic trash on it with no questions asked. Those were even better terms than the extravagantly generous ones Paulson was proposing in his bailout. So he used most of the original chunk of bailout money to give banks a big wet kiss and send them on a buying spree and sweetened the deal further by that illegal tax break he said they could have. There are so many cons going on at the moment that you would need a chart to keep track of them all.
thanks boo – dugg and recommended.
Make it stop! Draft Paul Krugman for Treasury Secretary!
I recommend this post. But you should include Boy Wonder CashandCarry. He is another of those Goldman Sachs patriots. This 35 year old whiz kid deserves credit for spending billions of taxpayer dollars for deserving capitalists. The latest plan is more money for AIG. AIG needs money because it is troubled and for the 5 Star resorts and hunting junkets. It is necessary the uber-rich to have some quality time away from the wife and kids.
Can you say, Maintain. Financial. Stability. Of. System.? But what the heck is a “one-off event”?
from naked capitalism: Paulson Now Admits Mendacity
The real problem is that the original idea was to buy troubled assets at face value, i.e., what they were worth when issued. Since this would have amounted to a huge giveaway, and Paulson was called on it, that plan was a no-go from the git-go. Buying these assets at market value would expose the insolvency of a number of financial institutions, therefore the plan had to be “reevaluated.” Capital injections do not necessarily infer bankruptcy as long as the terms are kept secret, as they have. Paulson probably now simply hopes to slink away before his aid to Goldman Sachs is exposed.
A long, long time ago, Sept. 23, Hanky (and Benny) testified before Congress. They were planning to Stablize. Financial. System. But times change and facts change, and now we have a whole new Stabilizing Greedy Corporations Plan.
This statement is no longer operative. But this could also be old fashioned PERJURY. Some call it a bailout, but Keith Olbermann calls it “Why Daddy went to jail.”
Shorter Paulson to the taxpayers and Congress…
“You fucked up… You trusted us.” (a la Otter from Animal House)
Although EW reminded me earlier today that we have a spineless Congress, I would so love to see him hauled in for perjury.