A Wall Street player all the way!
Let's remember:
At his confirmation hearing in June 2006, he listed his priorities as restoring the long-term financial stability of Social Security and Medicare (nope), keeping taxes low and simplifying the tax system (not really), expanding trade agreements so that American workers, business, and farmers could compete globally (well, there's Peru), and enhancing the flexibility of financial markets by preventing "creeping regulatory expansion" (oops).
While those are the sorts of bromides that Republican cabinet nominees serve up at confirmation hearings, Paulson did make an effort. He published reports on Social Security and Medicare and tried to get a conversation going, but couldn't find anyone who wanted to talk about it.
Too bad, so sad. No money social security money to pump up Wall Street.
link
Seems Paulson is another ex-Nixon Whitehouse and Pentagon alumni with great ambition:
"I didn't want to be Treasury Secretary just to be Treasury Secretary," he says. He wanted to have an impact, he told the President, who assured him in writing that he would be equal in stature with the Secretaries of State and Defense, as well as chief spokesman on all economic issues. snip
At this rate I am sure he will go down in the history books.
And he was able to sell his shares at top dollar saving an etimated 200 million in capital gains. Smart man.
(One fringe benefit was the capital gains tax exemption given to federal appointees who have to sell holdings before they take office: When Paulson sold his $500 million of Goldman Sachs stock, he saved tens of millions of dollars.)
And his assessment of the economy, after he had cashed in:
In early August 2007, President Bush quoted Paulson as telling him, "This is far and away the strongest global economy I've seen in my business lifetime." This rosy assessment was served up after two hedge funds were wiped out, credit-rating agencies had begun to downgrade subprime debt, and a German bank called IKB imploded. Several days later, short-term credit markets froze, the European Central Bank injected $129 billion into the banking system, and the Fed followed suit. Even then Paulson sought to accentuate the positive. "We are going to work through this problem just fine," he said, perhaps hoping to soothe jittery investors. "These things take a while to play out."
He was right about that last part.
And in January:
One thing Paulson and the White House did not want in the bill or anywhere else was a more targeted effort to stimulate the housing market by making direct payments to overextended homeowners. The notion of bailing out borrowers who were teetering on the edge of default was anathema to Republicans.
I can only assume he needed all those dollars for his bailout plan for Wall Street: Tickle Down Bailout.
Paulson told Fortune: "The freedom to fail goes right along with the freedom to succeed,"
In the 1990's he told Japan:
"It's a heavy tax on your markets and your society if you don't let institutions fail."
$29 billion in financing from the Fed to save Bear Stearns, and how much for AIG? There won't be any credit left for mainstreet, it's being sucked-up for the investment firms. AND now the Trickle Down Bailout. Please no more.
Most of the quotes were from the CNN Money article, the whole thing is worth reading.
And one more little news article, who saw the looming disaster and got out early?
Goldman Sachs Escaped Subprime Collapse by Selling Subprime Bonds Short
link
Just not sure this man has the common American's interest at heart.
Here is a summary of the regulation he proposed from the comments on the cnn article:
SUMMARY OF THE
"EFFECTIVE REGULATION ACT OF 2008"
The "Effective Regulation Act of 2008" is The Financial Services Roundtable’s (Roundtable) response to the current turmoil in the nation’s financial markets. The Act calls for coordinated regulation of the Financial services industry that is principles-based and that encourages full compliance with rules and Laws through an open, ongoing, and constructive engagement between financial services firms and Federal and state financial regulators.The key features of the Act are based upon recommendations made by the Roundtable’s Blue Ribbon Commission on Enhancing Competitiveness, which was co-chaired by James Dimon, the Chairman and Chief Executive Officer of JPMorgan Chase & Co., and Richard M. Kovacevich, the Chairman of Wells Fargo & Company.
The Act has three, inter-related titles. Title I expands and enhances the mission of the President’s Working Group on Financial Markets to ensure that all regulators at the national and state levels are cooperating effectively and have an affirmative mandate to be more forward looking. Title II establishes a common set of principles for all financial services firms and regulators. Title III provides for the application of "prudential supervision" by all financial regulators. Prudential supervision is defined as a
form of regulation that encourages full compliance with rules and regulations based upon an open, ongoing, and constructive engagement between financial services firms and their regulators. A more detailed summary of the key features of the Act appears below.
Title I – Regulatory Coordination
Title I would codify the President’s Working Group on Financial Markets and expand the membership and mission of the Working Group. Currently, the Working Group operates under the terms of an executive order and includes only the Secretary of the Treasury, the Chairman of the Board of Governors of the Federal Reserve System, the Chairman of the Securities and Exchange Commission, and the Chairman of the Commodities Futures Trading Commission. Membership The membership of the Working Group would be expanded to include not only the existing members of
the Working Group, but also the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the Chairman of the Federal Deposit Insurance Corporation, the Chairman of the National Credit Union Administration, the Director of the Office of Federal Housing Enterprise Oversight, the Chairman of the Federal Housing Finance Board, the Chairman of the Federal Trade Commission, the
Chairman of the Financial Institutions Regulatory Authority, and individuals knowledgeable in state banking, insurance and securities regulation. The Secretary of the Treasury would chair the Working Group, and it would be required to meet at least quarterly. 2 Mission The expanded Working Group would provide a means for federal and state financial regulators to share information and to develop coordinated policy positions. The Working Group would be directed to: (1) serve as a forum in which financial regulators may identify and consider issues related to the regulation
and supervision of financial services firms, including the stability and integrity of financial markets; (2) develop early warning systems to detect potential points of weakness or strains in U.S. or global financial markets; (3) recommend coordinated actions for financial regulators and financial services firms, especially in times of market stress or financial crisis; and (4) oversee the implementation of the system of principles-based regulation and prudential supervision established in Titles II and III of the Act.
Congressional Oversight
As an entity created by the Congress, the Working Group would be subject to the oversight and direction of the Congress. The Working Group would be required to issue an annual report on its activities to theCongress, and the Chairman of the Working Group would be required to appear before the House Financial Services Committee and the Senate Banking Committee on an annual basis. Funding The Act calls for such funds "as shall be necessary" to enable the Department of the Treasury to staff the Working Group.
Title II – Principles-based Regulation
Title II would codify six principles ("Guiding Principles") to guide the actions of financial regulators and financial services firms. These principles are designed to enable regulators and firms to adapt and respond to changes in markets, technology and consumer behavior more effectively than is possible under the current system of financial regulation. The first principle is to treat consumers fairly. Six Guiding Principles
The six Guiding Principles are: (1) fair treatment for consumers (including competitive pricing, clearly written disclosure of key terms and conditions, protection of non-public personal information, the secure and efficient delivery of products and services, the timely and fair resolution of disputes, and the provision of relevant guidance regarding products and services); (2) competitive and innovative financial markets; (3) proportionate, risk-based regulation; (4) prudential supervision and enforcement;
(5) options for serving consumers (including a single national charter and single national regulator, as well as uniform, national consumer protection standards); and (6) management responsibilities (including the maintenance of adequate financial and managerial resources and application of ethical conduct at all levels of the firm).
3Implementation and EnforcementCompliance with the six principles would be phased-in over seven years. All federal and state financial regulators would be required to align existing regulations with the principles during the five-year period immediately following the date of enactment of the Act. (Inconsistencies between existing law and the
principles would have to be addressed by the Congress and state legislatures.) Individual financial services firms would then be given an additional two years to bring their policies and practices intoalignment with the principles. At that point in time, a firm would not be required to comply with any regulations that are inconsistent with the principles. Firms could ask federal courts or the Secretary of the Treasury to make determinations regarding the consistency of particular regulations with the
principles. A safeharbor clause would permit a firm to comply with any regulations deemed not to beinconsistent with the principles. Failure to comply with the principles could subject a firm to an enforcement action, including a cease and desist order or civil money penalty. Regulatory Action Plans Each federal and state financial regulator would be required to establish a continuing process for assessing the consistency of its regulatory and supervisory practices with the principles. This process would include the preparation of an annual regulatory action plan that identifies regulations and actions
deemed to be consistent or inconsistent with the principles. The regulatory action plan also would include recommendations for changes in law, to the extent necessary. Such plans would be submitted to the Working Group, the Congress, and State governments.
Title III – Prudential Supervision
Title III seeks to protect consumers, investors and markets through the application of a system of supervision that encourages an open and ongoing engagement between individual financial services firms and financial regulators, and promotes compliance with applicable law and regulation through self-identification and self-correction of problems before they become serious. This form of supervision is called "prudential supervision." Prudential supervision is not intended to be a complete substitute for
formal enforcement actions. Formal enforcement actions would continue to be appropriate in cases of fraud, serious abuses, egregious behavior, or ineffective voluntary compliance. Prudential Supervision Defined The Act defines "prudential supervision" as a form of supervision that: (1) is designed to ensure compliance with applicable laws and regulations; (2) is based upon an open and ongoing engagement between a financial regulator and a firm; (3) encourages a firm to establish and maintain sound internal
controls; (4) promotes and acknowledges self-identification and self-correction of compliance problems by individual firms; (5) recognizes and distinguishes among firms based upon their risk profile; and (6) includes transparent regulatory incentives designed to promote compliance with laws and regulations. 4 Supervisory, Enforcement and Administrative Policies Title III requires federal and state financial regulators to adopt a series of policy statements designed to facilitate the application of prudential supervision. Issues to be addressed in these policy statements include: (1) the establishment of internal controls by firms; (2) the establishment of an open and ongoing engagement between firms and regulators that is risk-focused; (3) the encouragement of self-reporting
and self-correction by firms; (4) the identification of the range of enforcement actions a regulator may apply to a violation of law or regulation; (5) the identification of the factors a regulator will consider in determining whether to bring an enforcement action; (6) procedures for ensuring that firms have sufficient notice of the law, regulation or other supervisory requirement upon which an enforcement action may be based; and (7) the publication of applicable policies and procedures related toinvestigations. Title III also requires each financial regulator to establish training and incentive programs
that promote the application of prudential supervision by examiners and other agency personnel. Ombudsman Title III provides for the appointment of an Ombudsman for prudential supervision by each financial regulator. The Ombudsman would ensure that the regulator has adopted practices and procedures that encourage the application of prudential supervision and help guide firms through the process of selfreporting.
The Ombudsman also would serve as a liaison between a regulator and a regulated firm.
Attorney-Client Privilege
Title III has two provisions designed to maintain the integrity of the attorney-client privilege. First, it provides that information shared with a financial regulator in the course of a supervisory or regulatory process will not constitute a waiver of the privilege. Such a rule currently applies to banking institutions, and Title III would extend that rule to all financial firms and their regulators. Second, Title III provides that financial regulators should not take actions designed to encourage a firm to waive the attorney client
privilege. This provision is similar to H.R. 3013, which recently was approved by the House of Representatives.
Got that? "prudential supervision" equals
(3) the encouragement of self-reporting
and self-correction by firms