I never like Paulson, anyway
His ramblings about the strength of the US economy shit me. So – although I’m late to this story – I was pleased no end by Slate’s look into his Jim-Cramer-like responsiveness to all this Sub-prime stuff (originally spotted over at the Big Picture, I should also disclose):
… it makes you wonder whether he’s been watching birds for the past year instead of reading the headlines on his Bloomberg machine. For these measures are a little like distributing condoms at a clinic for teenage moms who are six months pregnant—good prophylactic ideas that arrived a half-year too late. Last year was a boom year for foreclosures, up 42 percent from 2005. And foreclosures have spiked sharply throughout 2007, up more than 55 percent in the first half of 2007; September 2007 foreclosures nearly doubled from September 2006. Rising homeownership rates, a success story routinely highlighted by the Bush administration, have fallen for the last three quarters.
Even as hundreds of thousands of people saw their homes dispossessed (some of them were probably speculators who may have simply walked away from no-money-down mortgages), the problem was essentially invisible to Paulson. Of course, it’s doubtful Paulson knows many subprime borrowers or subprime lenders. On the other hand, the former head of Goldman Sachs is a member in good standing of the club of Wall Street CEOs. When the subprime meltdown began to disturb the CEOs’ sleep, he responded with alacrity. Even as he had harsh words for the entire mortgage complex—from brokers to credit-rating agencies—and recommended far-reaching reforms, Paulson was careful to single out one class of actors for protection. He noted that the issue has been raised as to “whether greater liability should be imposed on securitizers and investors.” In other words, should the Wall Street firms that peddled mortgage-backed securities that turned out to be worthless a few months later be subject to greater accountability through the legal system? His answer: “In my view, this is not the answer to the problem.”
Check out the article, if you have a few minutes.