Paulson says Americans can remain confident
WASHINGTON (AP) — Treasury Secretary Henry Paulson said Monday the American people can remain confident in the “soundness and resilience in the American financial system.”
Briefing reporters at the White House, Paulson said he “never once” considered it would be appropriate to put taxpayer money at risk to resolve the problems at Lehman Brothers. The nation’s fourth largest investment bank filed for bankruptcy protection earlier Monday.
Starting Friday, Paulson participated in three tense days of negotiations at the New York Federal Reserve Bank in which he held firm to the position that the federal government would not step in and supply any money to resolve the crisis at Lehman.
Faced with the prospect of no government help in dealing with Lehman’s huge losses on its mortgage holdings, other financial firms lost interest in trying to buy the venerable firm. That forced New York-based Lehman to file for bankruptcy protection, making it the largest bankruptcy in history in terms of assets, surpassing the failures at Worldcom and Enron earlier in the decade.
Paulson explained his decision by telling White House reporters that any decision to put taxpayer money at risk to prop up a private company must be undertaken only after considering all alternatives.
“Moral hazard is something I don’t take lightly,” Paulson said, referring to the belief that when the government steps in to rescue a private financial firm it encourages other firms to engage in risky behavior.
“I never once considered that it was appropriate to put taxpayer money on the line in resolving Lehman Brothers,” Paulson said.
The current credit crisis will not be resolved until the prolonged slump in housing comes to an end, he said.
“Until we stem the housing correction, until the biggest part of that is behind us and we have more stability in housing prices, we’re going to continue to have turmoil in financial markets,” Paulson said.
Paulson, who was heavily involved in the decision last week for the government to take control of mortgage finance giants Fannie Mae and Freddie Mac, said if that action works as expected in helping to stabilize the mortgage markets, then housing should start to rebound.
“I’m not saying two or three months, but in months as opposed to … years,” he said.
AP | Martin Crutsinger | Monday, September 15, 2008
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For those who want to make a buck on the market, read and pass thsi on.
The collapse of the financial markets is the result of one thing and one thing only, American job losses. You can listen to politicians and the media spin this all you want but the collapse of our markets began the minute the Presidential candidates in 2004 mentioned the losing of jobs that they said Americans would not do. They used this catch phrase as the green-light for companies to job American workers and outsource their jobs. Today two of the nation’s largest and well-known financial firms – Lehman Brothers and Merrill Lynch – closed shop- no more. Lehman has filed for Chapter 11 bankruptcy protection and speculation is that they are expected to be liquidated. Merrill Lynch is being bought by Bank of America. One of the reasons is that these companies service Americans who could no longer pay their mortgages because their companies have outsourced and jobsourced their manufacturing jobs overseas. If you think this is the end then you are an idiot because it is not and the reason is that idiotic economic professors taught that outsourcing and globalization were good, not because they believed this but because outsourcing and globalization were the new fad and these professors did not want to be the typewriter repairmen of the new decade, these professors were protecting their own asses. Add the scared to death idiotic professors to the uneducated statements about jobs Americans won’t do and you have the equation for disaster. The credit markets and the housing industry are just the results of job losses and they are not the root of the problem, they are merely the symptoms. If we do not level the playing field with China and India immediately and slow the trade deficit then it will only get worse and will never get better. Investors have been urged not to panic and to stay the course but for what reason? If things stay as they are then it will only get worse until we all live like poor peasants in China and penny a day farmers in India. Individual bank accounts are insured for up to $100,000 each and stocks purchased through Lehman or Merrill Lynch are secured as well, but you must remember that the insured amounts may vary. The real shame in all this is that Lehman workers have already have already lost their jobs and many more are likely to so its not just the manufacturing jobs but the support jobs as well and this is why the manufacturing jobs are so important, they provide the base for all other jobs. You must also remember that financial companies are tied to insurance companies and the insurance companies are the next dominoes up to fall. There is already vast speculation on Wall Street that AIG may also falter. This is well past $600 checks, the government needs to slow down the trade deficit and encourage domestic job growth and production or this will all only get worse. All Americans need to realize that it’s not just manufacturing jobs anymore it’s all jobs. A lot of people are going to be losing their jobs on Wall Street alongside their manufacturing brothers in areas like Flint Michigan and Detroit Michigan. It’s time we not only have change but we have action.