Just five days after Congress approved the Tarp, Treasury Secretary Hank Paulson was telling a journalist working on a profile of him that the government would use the money allocated by Congress to purchase or insure troubled assets to directly invest in bank equity.
“One thing I can say to you—because this is embargoed—is we very much are going to need to inject capital and come up with programs to do that,” Paulson told Vanity Fair national editor Todd Purdham a week before the capital injections would be announced. “This has now moved to the point where $700 billion acquiring assets isn’t going to be as effective as we need it to be. So we’re going to do that”—inject capital—”and we just haven’t figured out how to get the Congress and the American people ready for it. But that will be something we’re going to need to figure out how to do.”
Purdham’s long article begins with the former Treasury secretary throwing up in his bathroom. This turns out to be related to a recent stomach bug rather than nerves during the crisis. Still, Purdham spoke with Paulson an impressive eight times over the course of 15 months, beginning in November 2007 and ending in January 2009. The results reveal a candid if always in-control man at the centre of the country’s financial crisis. Paulson tells Purdum he felt “as if he’d been boiling in oil for a year.”
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