Sept. 21, 2008 -- Treasury Secretary Henry Paulson said this morning that the White House will push for foreign firms to be included in the $700 billion financial industry bailout.
"We have a global financial system. And we are talking very aggressively with other countries around the world," Paulson in an interview on ABC News' "This Week with George Stephanopoulos."
"If a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institution. That's a distinction without a difference to the American people. The key here is about protecting the system."
But Paulson, the architect of the bailout, said that he will fight requests by Democrats to include a broader stimulus package in the bailout legislation. "We need this to be clean and quick, and we need to get it in place," said Paulson.
Paulson also rejected proposals to include limits on executive compensation. "We need a lot of reforms. And this is going to be something Congress and the next administration is going to be working on for a long time," Paulson explained. "But these can't be done, and shouldn't be done, in a matter of days. And we need this program in days in order to protect the American people."
And he postponed calls to incorporate protections for homeowners facing foreclosure, saying they would not be included in this bill. "We've been focused on homeowners for a long time, working to avoid foreclosure ... it sure seems to me that, as we buy these mortgage-backed assets, we will have much more leverage in working on the kinds of programs we need to work on."
When asked what will happen if the emergency bailout fails, Paulson asserted, "this is something that has to work. I very much believe it will work."
Responding to questions on the total cost to taxpayers, Paulson said "it would be extraordinary if the ultimate cost was not well below what the headline number is."
"When you look at the money that is spent to purchase assets that will be held and sold, and the price you will get for those assets will be based upon how the economy does, the pace at which the housing markets recover. But the ultimate cost will be well below what was actually spent for the assets... I don't like the fact that the American taxpayer is bearing that burden, but it is far better than the alternative," he explained.
He also expressed his belief that it is not "fair to compare that with spending for health care or Social Security." When asked why, he responded "Because this is not traditional spending. This is money to purchase illiquid assets. Those assets will be held and will be sold."