Paulson Speaks Out
Feb 29th, 2008 @ 5:30 PM by Alden Smith
Former chief executive of Goldman Sachs Group Henry Paulson had a lot to say this week about the plans in place by Washington to help ease the crunch in the housing market. He claims that the plan will do nothing more than bail out for reckless lenders, investors and speculators. His concern is that these measures as laid out will do little to help homeowners who are struggling.
This raises food for thought. From reviewing the stipulations of what has been presented so far, I tend to agree with Paulson. The really sad part of this whole scenario is that by opening up parameters, we would then essentially have a real bailout, not just “help”.
At a House hearing yesterday, Federal Reserve Chairman Ben Bernanke was making noises that he is favorable to possible further interest rate cuts. This comes on top of his warning that inflation pressures have intensified in recent weeks.
Paulson seems to be in the know. He reports that over 2 million people could lose their homes this year due to foreclosure. He predicts that the administration’s market-based approach will be enough to keep the situation under control. He told the Wall Street Journal “I don’t think I’ve seen any scenario where the American taxpayer needs to be stepping in with more taxpayer dollars.”
This comes amidst the lack of bipartisan cooperation on the $152 billion stimulus package. It appears that the Bush Administration and House Dems are not seeing eye to eye on how this should be handled.
Rep. Barney Frank (D., Mass.), chairman of the House Financial Services Committee, stated that “they’re not helping enough people. We’re not going to get out of the crunch until we stop this cascade of foreclosures.”
This is another time will tell thing. I am sure that the American taxpayers are keeping a wary eye on circumstances in Washington. With the economy in the shape it is today, plus the bloated financing of the Iraqi war, it looks to me like we might be in for a long, hard ride.