December 2, 2008 8:43:44 PM CST
(Newser) – If you'd told economists 18 months ago what lay ahead in the financial industry, predictions for the American economy would be dire. The fact that things aren't totally awful—we still haven't entered into a recession—is testament to the good defense of Hank Paulson and Ben Bernanke. What they aren't doing, writes David Leonhardt in the New York Times, is fixing the underlying problems that led to Lehman's failure and AIG's bailout.
For Leonhardt, the current crisis resembles America's bailout of Chrysler in 1979—although the government saved the company, it did nothing to stem Detroit's decline. Paulson and Bernanke need to play offense and start paying attention to what got us here: "a stagnation of incomes, an explosion of debt and a decidedly outdated, and limp, approach to government oversight."
Source New York Times
Nov 18, 08 11:00 AM CST Treasury Secretary Henry Paulson told Congress today he opposes tapping a $700 billion taxpayer-funded bailout pool to help struggling US automakers. Paulson and Federal Reserve Chair Ben Bernanke were on Capitol Hill defending their management of the bailout program, just a week after the Bush administration abandoned the original strategy behind the rescue. More »
Nov 11, 08 9:45 AM CST With nearly half of the $700 billion bailout committed, a growing array of distressed companies is lobbying the government, the Wall Street Journal reports, increasing the likelihood the Treasury will ask Congress for the rest of the bailout cash soon. But varied interests among legislators and emerging unemployment risks could turn up the pressure to spread those funds beyond financial firms. More »
Nov 10, 08 12:54 PM CST The Federal Reserve has lent more than $2 trillion to financial institutions under programs without congressional oversight—and will not disclose to whom or under what terms, Bloomberg reports. The loans are separate from the $700 billion congressionally approved bailout package. Investors and citizens are concerned that the collateral given in these unregulated programs could be improperly valued. More »
Nov 4, 08 8:21 AM CST Treasury is considering using some of the $700 billion at its disposal to buy stakes in a range of financial companies beyond banks, the Wall Street Journal reports. The idea comes after seeing measured success in thawing credit markets by taking equity stakes in several banks. Treasury may also abandon its plan to buy troubled assets from banks at auction, instead purchasing those directly. More »
Oct 23, 08 7:47 AM CDT Does Henry Paulson have any regrets about his widely-panned handling of the financial crisis? “I could have seen the subprime problem coming earlier,” he allows, before quickly adding, “I’m not saying I would have done anything differently.” Critics see things differently, of course, so Paulson sat down with the New York Times to defend his actions, including allowing Lehman Bros. to fail and pushing the original controversial bailout. More »
After some early missteps, they have acted aggressively to keep the financial system functioning, including Tuesday’s stunning takeover of AIG, while still forcing Wall Street to suffer for its sins. - David Leonhardt
Regulators assumed that a real estate bubble couldn’t happen and that Wall Street could largely police itself. And households with incomes that haven’t kept up with inflation said yes when lightly regulated banks offered them wishful-thinking loans.
Financial Crisis • bailout • credit crisis • recession • Henry Paulson • Ben Bernanke • Lehman Brothers • Chrysler • AIG
