>September 8, 2008
Orlando–Secretary of Finance Henry Paulson has some tall explaining to do. The American taxpayer demands it. He recently took over Fannie Mae and Freddie Mac, ousted their president and CEO and assumed management of two very poorly financed and managed companies.
First, President Bush and Paulson should come on national television and explain these actions. In a free country with a market-driven economy what the administration did is tantamount to something you hear about in dictatorships, not in America. Here’s what they could say:
“Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil . . . at home and around the globe.” That’s actually what Treasury Secretary Henry M. Paulson said in announcing the government’s actions.
“A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance. And a failure would be harmful to economic growth and job creation,” he said. We’ll we know that, but why wasn’t action taken sooner?
Question One: Explain in simple language why these firms are so important to the American economy. Why not a simple bailout like Bear Sterns and let them go on their way? It’s obvious, their leadership was inept or dishonest. Give Americans the full facts about what went on, even if it hurts the Bush Administration. Don’t gloss over it. Tell us what’s coming up next. We’re about fed up with bailouts at our expense. It weakens the dollar and makes it harder to put meat and potatoes on the table. Inflation is already really hurting us. Why play so high and loose with our money?
Question Two: If things are so bad, why didn’t you see it coming? Why did you wait so long to take such drastic action? Is someone in Washington falling asleep. Why weren’t the Democrats calling for Bush to do something before now? Or maybe they were. If readers have some information, please comment.
Question Three: How much? How much is this going to cost you and me, Mr. and Mrs. American taxpayer? Why doesn’t anyone have a handle on the costs? Or is it so bad you can’t face us with the facts? Come on, George Bush, you owe a full accounting, and not next week but right now. Someone knows precisely how bad things got. Someone also knows how much it may cost the U.S. taxpayers…
Question Four: Mr. Paulson, what makes you sure you can manage mortgage companies any better than their predecessors? True, you were previously the Chairman and Chief Executive Officer of Goldman Sachs, one of the world’s largest and most successful investment banks. The firm acts as a financial advisor and money manager for corporations, governments, and wealthy families around the world. Goldman offers its clients mergers & acquisitions advice, underwriting services, asset management, and engages in proprietary trading, and private equity deals. It is a primary dealer in the U.S. Treasury securities market.
Good so far. What else do we know about you? Since the President refuses to give us owners of Fannie and Freddie the full scoop, I’ll fill you in on Paulson. Oh, by the way, it does seem odd that we are only owners in bailout situations? If we want full ownership we have to pay a buck a share. What’s with that?
Like Al Gore, he’s a global warming nut. But to offset that, he earned his Eagle Scout award in the Boy Scouts of America and got his Bachelor of Arts in English from Dartmouth College in 1968. We don’t know his GPA, but he spent his fall afternoons butting heads on the gridiron, earning honorable mention All American as an offensive lineman. All of that is good for running America’s mortgage system? And after all of that he still believes in global warming? Actually, most of us do. What we don’t believe in is that running our cars is warming the atmosphere. Neither does Al Gore. He runs an airplane, a bigger house than yours, and a huge SUV.
President Ford (and Justice Byron “Whizzer” White) was also a football player, wasn’t he, and it didn’t ruin his thinking patterns…not much? He just couldn’t swing a golf club without hitting people.
Paulson was born in Palm Beach, Florida, to Marianna Gallaeur and Henry Merritt Paulson, a wholesale jeweler, but was raised in Barrington Hills, Illinois. I’m glad his parents took him away from the rich kids in Palm Beach to train him right up north. He is a member of Phi Beta Kappa and dummies don’t get in that exclusive club. The ideal ΦBK has demonstrated intellectual integrity, tolerance for other views, and a broad range of academic interests. Each year, about one college senior in a hundred, nationwide, is invited to join Phi Beta Kappa. He was also president of his Christian organization on campus.
He met his wife Wendy during his senior year. The couple have two adult children, Henry Merritt III and Amanda Clark, and became grandparents in June 2007. They maintain homes in Washington, DC and Barrington Hills, Illinois. None of that Palm Beach stuff.
Paulson was Staff Assistant to the Assistant Secretary of Defense at The Pentagon from 1970 to 1972. He then worked for the administration of U.S. President Richard Nixon, serving as assistant to John Ehrlichman from 1972 to 1973. He came out untainted, and that’s a credit to his integrity.
He joined Goldman Sachs in 1974, working in the firm’s Chicago office. He became a partner in 1982. From 1983 until 1988, Paulson led the Investment Banking group for the Midwest Region, and became managing partner of the Chicago office in 1988. From 1990 to November 1994, he was co-head of Investment Banking, then, Chief Operating Officer from December 1994 to June 1998; eventually succeeding Jon Corzine (now Democrat Governor of New Jersey) as its chief executive. His compensation package, according to reports, was US$37 million in 2005, and US$16.4 million 2006. His net worth has been estimated at over $700 million. I’m wondering if he bought some houses during the 2005 mortgage value runup and got a government bailout?
Paulson has personally built close relations with China during his career. In July 2008 it was reported by The Daily Telegraph that: “Treasury Secretary Hank Paulson has intimate relations with the Chinese elite, dating from his days at Goldman Sachs when he visited the country over 70 times.”
Paulson has been described as an avid nature lover. Most Eagle Scouts Are. He has been a member of The Nature Conservancy for decades and was the organization’s board chairman and co-chair of its Asia–Pacific Council. In that capacity, Paulson worked with former President of the People’s Republic of China Jiang Zemin to preserve the Tiger Leaping Gorge in Yunnan province.
Paulson is also on the Board of Directors of the Peregrine Fund; was the founding Chairman of the Advisory Board of the School of Economics and Management of Tsinghua University in Beijing; and, previously served as chairman of the influential trade group, the Financial Services Forum.
Notable among the members of Bush’s cabinet, Paulson has said he is a strong believer in the effect of human activity on global warming and advocates immediate action to decrease this effect. That “human activity” is a nice way of saying you cars caused global warming of which I disagree.
Out With It Now! Or get out of the way and let us private citizens hire an ombudsman who can hire independent CPAs to figure it out if it still boggles your mind.
I’m really surprised Congress isn’t asking for an investigation–this thing is that big. And I don’t say that because of party affiliation.
I’m a Republican. Let’s be done with Washington politics. We’re all fed up with it. Let the chips fall where they may.
We’re the kind of country that really looks down on government taking over anything, let alone the mortgage companies–Fannie Mae and Freddie Mac.
I honestly believe Washington is broke and can’t manage anything, let alone the entire mortgage industry.
American citizens and Wall Street are wondering what this is going to cost us the taxpayers. They were saying over CNBC this morning that Fanny Mae had lost more than 90 percent of its value over the past year. That was before the ticker tape started up. Frankly, there is much we don’t know. How much are the Fed regulators going to have to speak up for these companies to get the market going again?
Wall Street is open: Wall street is reacting positively this morning. Secretary of Finance Hank Paulson’s action was greeted positively. People vote with the pocketbook on Wall Street. Among other companies that are up today, Washington Mutual is up 17.5 percent. Of course, they just fired their leader.
In other important news: Oil prices are up $3 at $118 per barrel due to hurricane Ike heading for the Gulf.
Apparently Fannie and Freddie are open–as I write–Fannie Mae is down 83 percent, Freddie is down 80 percent. Each is selling for only a dollar a share. Is that a good buy or should you be wary before investing. Be wary! But remember, it’s the Federal Government you’re investing in. How bad can it get?
Cuba is in the depths of Ike’s storm. More than 900,000 people have fled to higher ground. Winds are 125 mph, with Ike moving westerly 14 mph. Outer bands only extend about 50 miles, so it won’t hit Miami. It may develop into a weak category one. Between Thursday and Saturday morning it could reach Louisiana and could strengthen into a category two or three.
This one appears to be headed more toward Houston than New Orleans. Homeowners in each area are scurrying. There will likely be mandatory evacuations, depending on the severity of the winds at landfall.