HENRY M. PAULSON Jr.: How to Watch the Banks

NY Times ^ | February 16, 2010 | HENRY M. PAULSON Jr.

[neverdem]

SIXTEEN months ago, our financial system teetered on the brink of collapse. The Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation took actions that were unpopular and previously unthinkable — but absolutely necessary to stave off an economic catastrophe in which unemployment could have exceeded the 25 percent level of the Great Depression.

These temporary actions have ended or will end. And our financial system is much more stable. But it is critical that we learn from the financial crisis and put in place reforms to avert a repeat of 2008 or something even worse.

Congress must pass financial regulatory reform. Delays are creating uncertainty, undermining the ability of financial institutions to increase lending to the businesses of all sizes that want to invest and fuel our recovery. Our overriding goal in restructuring our financial architecture should be that taxpayers never again have to save a failing financial institution.

The debate...

--snip--

Winding down a large institution is difficult and time-consuming. The regulators with this responsibility will need to be trained to do the job. And we must also require all large firms to develop a road map for their liquidation well ahead of any failure.These are not the only necessary reforms — we must also address regulation of derivatives and our over-reliance on credit ratings agencies. Over time, we have to simplify the patchwork quilt of regulatory agencies and improve transparency so that consumers and investors can punish excesses through their own informed investing decisions. We have to examine the many policies that favor homeownership, and recalibrate our support for them. We must also tackle what is by far our greatest economic challenge — the reduction of budget deficits — a big part of which will involve reforming our major entitlement programs: Medicare, Medicaid and Social Security...

[neverdem]

We have to examine the many policies that favor homeownership, and recalibrate our support for them.

Finally, there's a hint at the root of the mess in the CRA, HUD, Fannie Mae and Freddie Mac government sponsored enterprises that caused the moral hazzards.

[Dilbert56]

Yes, Congress di push Fannie and Freddie to buy and resell bad mortgages. The Federal Government also pushed financial firms to traffic more heavily in Mortgage Backed Securities by specifying that those securites required less collateral. Painful explanation here

[combat_boots]

[Brilliant]

The problem was not caused by the failure to watch the banks. It was caused by a real estate bubble that was fueled by the policies of the same Congressional overseers who were supposed to be regulating the banks.

[jnsun]

Our overriding goal in restructuring our financial architecture should be that taxpayers never again have to save a failing financial institution.

Right Henry, now you say it, after one hundred million "taxpayers" (those who see through the Left), dictated to by a corrupt federal government, question whether they ever had to "save a failing financial institution" (like AIG and Goldman Sachs) in the first place.

Like you say, we've got an ingenious idea, dismantle the federal government to a mere Constitutional representation of what it was meant to be.

Johnny Suntrade

[Grim]

Hank Paulson walked away from the smoldering ruins of the American economy with 700 million dollars. He is probably more responsible for the disaster than any other American and he has the unmitigated gall to lecture us on how to resolve the crisis.

He deserves to be in jail, at the very least.

[Mamzelle]

re: Hank Paulson walked away from the smoldering ruins of the American economy with 700 million dollars. He is probably more responsible for the disaster than any other American and he has the unmitigated gall to lecture us on how to resolve the cri)))

When he reappeared on the scene with a book and a demand for Narcissistic Supply...this toxic billionaire? Takes my breath away. The Russians would know how to deal with someone like this. He's trying to make himself a hero, but he's just a low-rent Soros.