On CNN, Sunday, with Wolf Blitzer, Steve Forbes says Paulson is worst Treasury sec in modern times. And Robert Reich says the bailout was sold on false pretenses
Here, read the transcript, from CQ politics.
BLITZER: Steve Forbes, do you have confidence in Paulson?
FORBES: No, sadly, Wolf. He’s about the worst Treasury secretary we’ve had in modern times. For example, this arcane accounting rule that I mentioned, mark- to-market, which has destroyed bank balance sheets, if we’d had that when we had the S&L crisis in the early 90s, we would have had a Great Depression then.
It’s now wreaking havoc in the insurance industry. Nobody pays attention to it, but it’s devastating. Repeal it, or at least suspend the thing.
And in terms of reviving the housing market, Fannie and Freddie are now owned by the federal government, so get over it; explicitly guarantee that debt, and then announce those two agencies are going to start issuing mortgages, buying mortgages with a 30-year fixed rate of 4.5 percent, 5 percent.
After all, the Treasury can now borrow at 30 years with a little over 3 percent, so that’s doable. You do that, housing prices start to go up; people can refinance; monthly payments go down. What is there to lose?
BLITZER: All right. I want you to respond, Robert Reich, to both of those proposals.
But the first question, Paulson -- do you have confidence in him?
REICH: Well, look, he’s in a very, very difficult position. I don’t have a great deal of confidence in his policies. I think that the great bailout that he engineered was really sold to Congress on false pretenses.
He said he was going to establish a reverse auction to establish the values of a lot of these securities, mortgage-backed securities. And he switched courses to recapitalize banks, throw money in the direction of banks. And now he’s saying, basically, he’s going to punt on that, as well.
So Paulson has not been very transparent. He’s been very opaque. And it has riled markets.
Now, what we need to do, and here’s where I might agree with Steve, at least to some extent, what we need to do is make sure that this bank bailout money is used not for executive compensation and bonuses and not for dividends for shareholders, and not for allowing banks to buy up other enterprises, but to get money down to Main Street so that small businesses and troubled home owners, student who is need additional credit and others, can get the money they need, right now, if they are credit-worthy risks.
Hank Paulson, another Bush appointee to add to the investigate and prosecute list?
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