The banks are a branch of govt now, aren’t they?
Paulson was CFO of Goldman Sachs before he went to Treasury.
It’s all really cozy, this revolving door of banksters.
The odd thing was that the tassle-shoed crowd on Wall Street was still pushing the SIV’s to loan short term money to players who were buying long term mortgage notes even after the Fed had raised interest rates 17 straight times to clearly pop the housing bubble.
So much for MBA’s being clever. The next time an ascot-wearing MBA preaches his superiority to you, remind him of the SIV’s prior to 2007.
...it will be interesting to see if Paulsen has identified a way to reduce the otherwise inevitable losses, but really, what are they going to do that will stop the SIV players from dumping a bunch of mortgage paper back onto the secondary market?
Of course, there is a way to stop the losses without pouring federal money into the mix: change the home repossession laws to favor banks instead of individual tax-payers. Of course, that wouldn’t be very popular.
But it would bring in the vultures who would want to buy those SIV-held notes in order to cheaply foreclose and own U.S. property for pennies on the Dollar.
That would be a pretty nasty way to avoid the SIV losses. Presuming that they don’t find another way, they’ll probably not go that route, either.