Sunday, September 21, 2008

Henry Paulson, Superstar

There are two remaining stand alone Wall Street investment firms - Morgan Stanley and Goldman Sachs. Henry Paulson, before he became Secretary of Treasury, was Chairman and CEO of Goldman Sachs with a long career in that organization. It is a gift to the country that this man is now leading us through the current financial climate.

"I hate the fact that we have to do it but it is better than the alternative." "This is not a spending program." "There are no guarantees." Those are quotes from Secretary Paulson from a Sunday show this morning. Paulson stresses the fact that we need new regulations and policies but that takes time. He submitted a regulatory blueprint some time ago but it hasn't been acted upon. There is no time now to consult egghead after egghead. Action has to be taken, in the most responsible way.

While partisans in the media, like Tom Brokaw on Meet the Press, will try to point fingers since that is what they do best, and some politicians try to blame President Bush for yet something else, this is not the time for that. To think one president, even Bush, is responsible for this is only coming from the unserious about the welfare of our country. This crisis has been a long time coming. Neither political party has a firm, complete answer. That is why a bi-partisan approach is the strongest.

If President Bush had appointed the cabinet of his second term in his first term, his Presidency would have been much smoother. The first MBA President, he knew he needed Henry Paulson to lead the economic horizon as the economy slowed. Bush has had a strong performance on leading the country to economic recovery after the devastation of 9/11. The stock market was performing at historical highs, unemployment at historic lows, interest rates very low. All good. But the regulations and reforms needed in the financial markets were lacking. In 2002, President Bush and Republicans in Congress tried to push for reform , especially with Fannie Mae and Freddie Mac, but were stopped by Democrats. This has continued every year since. Though loathe to regulate a free market, some strong reforms are needed and Democrats must work with the ideas of Republicans now.

Stabilize the situation first, then reform. Henry Paulson has an MBA from Harvard and he is running into some demands by all the lawyers on Capitol Hill who think they know better than he on what else needs to be included in the legislation Paulson and the administration will ask to be passed before the recess after next week's end in Congress.

Michael Bloomberg, a billionaire to whom both parties look for sound financial advice, said, "Hank's the right guy" for the job now. While partisan hacks like Chuck Schumer want to punish greedy executives within this legislation, Paulson said that will come but first we cannot allow financial executives to turn away from support. Schumer insists another stimulus bill must be included. Senator Jon Kyl, on the panel with Schumer, said a stimulus package shouldn't be included right now. The time for political agendas is later.

Both senators said the chance of the legislation passing through Congress before the recess is more than 50/50.

I watched Brokaw interview Paulson and Bloomberg this morning. He lamely prompted Bloomberg to state the U.S. will be in an official recession soon. Bloomberg, a grown up, didn't take the bait. Bloomberg stresses more accountability and transparency is needed, as do both presidential candidates.

There is not much difference in what both presidential candidates hope will be solutions to the current financial atmosphere. Bloomberg said we have to have realistic regulations in the free market - note to Republicans, and free markets have to have capitalism and low taxes for growth - note to Democrats. John McCain called for reforms and transparency 2 years ago and he was ignored by the Bush administration and by his fellow senators - including Barack Obama. That is to McCain's credit. I know it is popular for Obama to mock McCain for being out of touch and not smart on economics but there is absolutely no evidence or history to point to that Obama is any smarter. McCain has a long history on the Senate Commerce and Technology Committee - the largest committee in the Senate and the one responsible for oversight on all commercial transactions. Obama would do well to ratchet down his arrogant ridicule of McCain. He looks small and unserious when he does that. Obama should humbly remember he couldn't define a capitol gains tax during a past debate.

This crisis needs the smart MBA's and the successful business leaders, not trial lawyers in the Senate, to guide us through. It's time for bloated egos to step aside and let the experts show what needs to be done. I think the politicians would be wise to temper their speeches and remarks in the manner of Michael Bloomberg. Bloomberg has been a declared Democrat, Republican and now a registered Independent. He has kept a cool head and offers even-handed suggestions to both parties. I hope someone is listening.

If all goes well with this bail-out, Henry Paulson will go down in the history books as one of the great Secretaries of Treasury. Let's let him do his job.


Jennifer said...

The initial rumblings from the economists of America don't come across as very encouraging in terms of the soundness of the bail out plan as proposed. And I take issue with your assessment that it's not the time to consult "egghead after egghead". Yes, quick action must be taken. But quick action without incredibly studious consideration can only bode poorly for the long term.

It's damn scary out there.

Karen said...

Well, I'll go with Paulson. He's a studious person. And, I suppose who all the economists of America are that you site - well,there are opinions all around. For the likes of Schumer to be on air saying, "some adjustments to the bill must be made" is laughable since he is one of the very ones who shot down all attempts to regulate/reform Fannie and Freddie over the past years.

Jennifer said...

I don't consider Schumer an economist, and despite the fact you cite him here, I assume you don't, either.

How do you feel about this verbiage in the proposal?

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Frankly, it leaves me cold.

Chuck said...

What we don't need is too many people stirring the pot. I am perfectly fine with one person, if he is qualified and Paulson seems to be, directing us through it. The quickest way to muck things up is to throw a bunch of economists at the problem, or even worse, a bunch of politicians. Besides the Dems like Harry "we don't know what to do" Reid have already weighed in.

As far as Brokaw, the media and the Dems have been cheering for a recession for over six months now. It's sick and pathetic to want millions to suffer to further thir political agenda.

Karen said...

I cited Schumer as a partisan hack trying to point his finger while acting as though he is serious about a real solution.

I don't have a problem with that passage. As I said, I'm fine with Paulson in charge. He has a strong team behind him. Most importantly, he is working in good faith and is not a career politican.

Karen said...

I agree. Paulson is the right man at the right time.

Wally Banners said...

George Bush has hurt the United States of America more than Osama Bin Laden ever did. From his Failure to Avenge America from 9/11 to his incompetence in New Orleans. Now our Economy is back to the Great Depression Era. The GOP shoves some senile lifetime Senator in front of the Public and demands that we trust it. GOP can't win wars, GOP can't handle the Economy,GOP doesn't care about the People. GOP = American Al Qaeda.

Jennifer said...

I guess since I was talking about economists and made no mention of partisan political hacks, I misinterpreted your tossing out the Schumer reference. Given everything, I have zero interest in pointing fingers and calling names and every interest in understanding the scope of this problem and the proposed solution that involves nearly a trillion dollars of taxpayer - MY - money.

I'm interested in long and short term return on investment, in responsibly righting the economy without rewarding the capitalistic greed that endangered these companies we're saving. I'm interested in how this bail out is going to impact our ability to govern in the coming years, across the board - from defense, to social economics, to basic services.

Partisan hacks are a dime a dozen. A monarchial treasury is uniquely troublesome. If we've learned nothing from these last eight years, surely we've learned the dangers inherent there.

Karen said...

Of course we are all worried about our own vested interests in the national economy. However to go into the whole 'monarch' theme that the Bush bashers use against this administration is something we will always disagree about. The next president, from either party, will be served well by the executive orders put into place by this administration.

We'll just continue to agree to disagree.

Jennifer said...

Seems your candidate agrees with me on that point, as well.

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