Monday
Dec012008
Paulson defends objectionable decisions
Monday, December 1, 2008 at 5:01PM
Treasury Secretary Henry Paulson said that although some of his decisions have been unpopular, they have been essential to preserving the free market system.
"Some of the things that I've been part of have been very, very objectionable decisions but they've not been difficult decisions because they are much [better] than the alternatives," said Paulson during a forum on business and policy issues sponsored by Fortune magazine.
When asked if there was any line that he would not cross in order to protect the economy, the Secretary was reluctant to answer.
"You're not going to get me to say 'never' and tell you where I'll draw the line, because if you were to ask me the question a year ago, I would have drawn the line in a different place than I actually did when I was faced with the choice."
Paulson explained that in order to combat the recent economic setbacks, there are several steps that need to be taken, such as creating more effective regulation in the financial system, establishing authorities to deal with non bank institutions, and updating infrastructure to better handle OTC derivatives. The Treasury Secretary contended that taking these actions warrants more immediate concern than finding the origins of the crisis.
"We don't want to rush to a quick conclusion...we should be focusing on getting through the night first and then when recovery is well underway we can look in the rearview mirror and really understand the nature of the problem."
"Some of the things that I've been part of have been very, very objectionable decisions but they've not been difficult decisions because they are much [better] than the alternatives," said Paulson during a forum on business and policy issues sponsored by Fortune magazine.
When asked if there was any line that he would not cross in order to protect the economy, the Secretary was reluctant to answer.
"You're not going to get me to say 'never' and tell you where I'll draw the line, because if you were to ask me the question a year ago, I would have drawn the line in a different place than I actually did when I was faced with the choice."
Paulson explained that in order to combat the recent economic setbacks, there are several steps that need to be taken, such as creating more effective regulation in the financial system, establishing authorities to deal with non bank institutions, and updating infrastructure to better handle OTC derivatives. The Treasury Secretary contended that taking these actions warrants more immediate concern than finding the origins of the crisis.
"We don't want to rush to a quick conclusion...we should be focusing on getting through the night first and then when recovery is well underway we can look in the rearview mirror and really understand the nature of the problem."
Regulation Proposed For Over-The-Counter Derivatives
Appearing before the Senate Banking, Housing, and Urban Affairs Committee Monday, Gary Gensler, the Chairman of the Commodity Futures Trading Commission articulated the need to lower systemic risk, prevent fraud, and increase transparency in the OTC derivatives market.
“If we are not fully able to regulate the dealers, we will not give the American public the comfort they need,” explained Gensler.
The hearing comes shortly after President Barack Obama’s call for sweeping regulatory reform, which aims to establish a regulatory body to oversee the entire financial system, provide transparency for large private investment funds, and supervise agencies that offer credit-ratings.
When asked by Sen. Mike Johanns (R-Neb.) if the proper regulation would have prevented the failure of insurance giant American International Group (AIG), Gensler responded, “I think that a number of features here would have slowed down and maybe even have stopped [AIG’s collapse].”