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For Paulson, Toughest Part Lies Ahead

Treasury has just weeks to create asset-buying behemoth

By Rob Quinn, Newser Staff

Posted Oct 4, 2008 8:34 AM CDT

(Newser) – The real work for the Treasury Department begins now that the bailout bill has passed, the New York Times writes. Secretary Henry Paulson has less than a month to get a massive asset management firm up and running, and to start pricing the toxic securities that have flummoxed experts. The Treasury is unlikely to buy any of the bad assets before the election.

Paulson—who is being advised by former Goldman Sachs cronies—is overseeing the project until the Treasury names someone to head it. Most of the work is expected to be outsourced, but the department will be hard put to find suitable finance wizards who lack a conflict of interest. The Treasury will also need to make difficult decisions between buying low to protect taxpayers or shelling out more to shore up banks.

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President Bush is greeted by Treasury Secretary Henry Paulson at the Treasury Department after the House passed the $700 billion financial bailout bill at the White House, Friday, Oct. 3, 2008. (AP Photo/Charles Dharapak)

Treasury Secretary Henry Paulson walks down the steps at the Treasury Department as he waits for the arrival of President Bush after the House passed the $700 billion financial bailout bill. (AP Photo/Charles Dharapak)

President Bush walks up the steps at the Treasury Department with Treasury Secretary Henry Paulson after the House passed the $700 billion financial bailout bill, Friday, Oct. 3, 2008. (AP Photo/Charles Dharapak)

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I can’t even fathom how I would manage that. How would I manage one side, where I’m seeking to maximize profit, and the other side, where I’m looking out for the social good? - Joshua S. Siegel, the managing principal of the Stone Capital Partners fund

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For Paulson, Toughest Part Lies Ahead