Hank Paulson was on Charlie Rose discussing two of the most recent controversies related to the $700 billion bailout: that he decided to use the money for bank infusions and that the banks could use this capital to make acquisitions. He also said it would take a while for this crisis to be resolved. (really?) How long? Months.
AP: “Clearly, we’re going to have a number of difficult months ahead of us in terms of the real economy,” Paulson said Tuesday in an interview on “The Charlie Rose Show.”…
So like two months? three? 240 (aka 20 years)? And if at the end of those “difficult months” there are fewer banks than there are now, that’s not a problem for Paulson.
The program to buy distressed assets from banks is expected to spend $100 billion initially, while Paulson announced last week that another $250 billion would be committed to buying stock in banks as a way of shoring up their capital reserves so that they will resume more normal lending operations.
Paulson said in his television interview that banks might use part of the money they receive from the government to make acquisitions of weaker banks.
“There will be some situations where it is best for the economy and for the banking system for there to be a consolidation,” he said.
That element of the program could prove controversial if strong banks employ the money they receive from the government not to make new loans but to swallow up rivals.
When the $700 billion bailout program was going through Congress, Paulson never mentioned the possibility that the money could be used to provide capital to banks, stressing instead that the other part of the program, having the government use the money to purchase distressed mortgage-related assets from the banks.
Paulson said that the emphasis in the program was changed in reaction to rapidly moving events as the situation in credit markets “became even more dire.” He said that before changing emphasis he got input from a number of people including billionaire investor Warren Buffett.
PBS is actually remarkably tech-savvy when it comes to Charlie. The whole episode is online, and embedded below, if you have an hour to kill.
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