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A Believer in Hands-Off Now a Defender of Hands-On

Treasury chief Henry Paulson has turned to intervention to calm markets

By Clay Dillow,  Newser Staff

Posted Jul 25, 2008 1:15 PM CDT
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(Newser) – Treasury Secretary Henry Paulson is in the midst of a reluctant about-face of his economic principles. The Los Angeles Times looks at how Paulson—a former chief executive at Goldman Sachs with a long history of faith in laissez-faire capitalism—has had to become the point man for the Bush administration's decidedly hands-on approach to fixing the nation's economic troubles.

“He's a man who came in with one agenda and is having another one forced upon him by circumstances," said one banker. "He’s in full defense mode at this point.” Paulson’s actions include underwriting JPMorgan’s purchase of Bear Stearns and last week’s proposal to Congress to prop up Fannie and Freddie. He’s even backed Ben Bernanke’s request for increased regulation of investment banks. The question now is how Paulson will react if the economy develops new, deeper problems.

Energy Secretary Samuel Bodman, left, and Treasury Secretary Henry Paulson, center, look on as President Bush makes a statement on energy, Friday, July 11, 2008.
Energy Secretary Samuel Bodman, left, and Treasury Secretary Henry Paulson, center, look on as President Bush makes a statement on energy, Friday, July 11, 2008.   (AP Photo/Evan Vucci)
Treasury Secretary Henry Paulson testifies on the economy, Tuesday, July 15, 2008, before the Senate Banking Committee on Capitol Hill in Washington.
Treasury Secretary Henry Paulson testifies on the economy, Tuesday, July 15, 2008, before the Senate Banking Committee on Capitol Hill in Washington.   (AP Photo/Susan Walsh)
U.S. Treasury Secretary Henry Paulson testifies on Capitol Hill in Washington before the House Financial Services Committee hearing on systemic risk and the financial markets.
U.S. Treasury Secretary Henry Paulson testifies on Capitol Hill in Washington before the House Financial Services Committee hearing on systemic risk and the financial markets.   (AP Photo/Manuel Balce Ceneta)
Treasury Secretary Henry Paulson, Federal Reserve Board Chairman Ben Bernanke, center, Securities and Exchange Commission (SEC) Chairman Christopher Cox testify on Capitol Hill in Washington.
Treasury Secretary Henry Paulson, Federal Reserve Board Chairman Ben Bernanke, center, Securities and Exchange Commission (SEC) Chairman Christopher Cox testify on Capitol Hill in Washington.   (AP Photo/Susan Walsh)
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Paulson at center of push to prop up Fannie, Freddie
Wall Street Journal

Paulson: Banks are safe, economy less so
Reuters

 
Henry Paulson • Bear Stearns • US economy • Freddie Mac • Fannie Mae • Treasury Department • subprime crisis • JPMorgan Chase • financial crisis

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