Paulson Defends Economy Bailout Efforts
Treasury's Paulson defends Bush admin's efforts in 'unprecedented' crisis.
Nov. 17, 2008— -- Treasury Secretary Hank Paulson tonight defended the Bush administration's actions to fend off a financial crisis that has already caused the stock markets to nosedive, financial institutions to crumble, and threatens to sink the U.S. auto industry.
Paulson said that in his remaining two months in office he would continue to focus on supporting capital markets and financial institutions, brushing aside calls for a second round of stimulus and criticism that his Troubled Asset Relief Program has shifted from its original focus. Paulson said that as many as 1,000 banks might apply for bailout funds from the TARP.
He also alluded to yet unrevealed efforts with the Federal Reserve to use TARP funds to get jammed credit markets flowing again.
Speaking before an audience of 100 of the world's CEOs at a dinner to launch the Wall Street Journal's CEO Council meeting, Paulson took exception to the assertion by panel moderator and Wall Street Journal Deputy Managing Editor Alan Murray that the Treasury department has engaged in "relentless experimentation" in attempting to solve the crisis.
Instead, Paulson said his department has been "creatively working" with the Federal Reserve and Congress to obtain wide authority to address the problems.
As evidence, Murray cited how the government's bailout of insurance giant AIG has been revised, its flagship relief program called TARP that's no longer using its $700 billion in authorized funding to purchase troubled assets, and changes in efforts to assist the troubled auto industry.
Paulson argued that the efforts his team has enacted have prevented further deterioration of the economy. He said the administration foresaw possible pitfalls and acted to cut them off.
"It's hard to get credit for what didn't happen," he said.
Paulson noted that during the two weeks that Congress debated the TARP, the situation deteriorated as banks, like Washington Mutual went under and Wachovia needed rescue.
"We had to do something greater," Paulson said. To fix problems he described as "unprecedented," Paulson said that they ultimately determined a focus on investing in capital rather than troubled assets would be more effective.
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