More lies, damn lies and Paulson lies. How can anybody believe this man?

biz.yahoo.com/ap/080316/paulson_credit_crisis.html

Treasury Chief Defends Fed Intervention
Sunday March 16, 11:01 am ET
By Jeannine Aversa, AP Economics Writer
Treasury Secretary Henry Paulson Says Fed Made Right Decision to Help Bear Stearns

WASHINGTON (AP) -- Treasury Secretary Henry Paulson on Sunday defended the Federal Reserve's decision to help rescue Bear Stearns Cos., the teetering Wall Street investment bank. He sidestepped questions about whether other firms are on shaky ground and the possibility of additional interventions of this kind.
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At the same time, Paulson sought to send a calming message that the Bush administration is on top of the turbulent situation. "The government is prepared to do what it takes" to ease turmoil in the financial system and minimize any damage to the national economy, Paulson said during a series of broadcast interviews. The Fed's intervention "was not a difficult decision. It was the right decision."

The Fed, using a Depression-era procedure, raced to Bear Stearns' aid Friday along with JPMorgan Chase & Co. Bear Stearns had made a fortune in mortgage-backed securities but faced a possible collapse after those investments soured. Wall Street nose-dived as fears spread about whether other big firms were in jeopardy.

"When you go through a period like this," Paulson said, "policymakers need to balance various consequences."

Some critics contend that the Fed's move was akin to a government bailout -- something the Bush administration has repeatedly said it is against.

"Well, every situation is different. We have to respond to the circumstances we're facing today," Paulson said. "And my concern is to minimize the impact on the broader economy as we work our way through this situation, and again, the stability of our financial situation."

The financial system, he said, is "more fragile than we would like right now."

Asked whether other financial companies may be in a situation similar to Bear Stearns', Paulson did not directly answer. He did seek to strike a confident tone.

"Well, our financial institutions, our banks and investments banks are very strong," he said. "And I'm convinced that they're going to come out of this situation very strong."

Paulson would not discuss what would have happened if the government didn't extend a financial lifeline to Bear Stearns. "I'm not going to speculate about what ifs," he said.

Economists increasingly believe the spreading fallout from a severe credit crisis has pushed the country into its first recession since 2001. The situation has led to record-high home foreclosures, forced financial companies to take multibillion losses from bad mortgage-linked investments and rocked Wall Street.

"No one is debating the fact that this economy has slowed way down," Paulson said. "We feel it, we know it, the American people know it."

The government's economic relief package, including tax rebates for people and tax breaks for businesses, should help bolster the economy later this year, Paulson said. He was cool to the need for additional economic stimulus, which is being promoted by Democrats in Congress.

Sen. Charles Schumer, D-N.Y., accused President Bush of not doing enough.

"The president is, indeed, behaving like Herbert Hoover. We're in the most serious economic problem we've been in in a very long time, much worse than 2001. The president's hands-off attitude is reminiscent of Herbert Hoover in 1929, in 1930," Schumer said. "There are lots of things that can be done, particularly on housing. Housing has been the bull's eye of this crisis."

Consultations about the Bear Stearns situation continued through the weekend among representatives from the Fed, Treasury Department, financial institutions and others.

President Bush planned to meet on Monday with his advisory panel on financial markets, whose members include Fed Chairman Ben Bernanke and Paulson. The panel on Thursday recommended stricter regulation of mortgage lenders as part of a broad effort to prevent a repeat of a credit crisis threatening to drive the country into recession.

With the value of the dollar plunging, Paulson stuck to the position of past treasury chiefs when he said a strong dollar is in the national interest. The dollar has dropped to a new low against the euro and a fallen sharply against the Japanese yen. That helps sales of U.S. exports to foreign buyers because it makes U.S. goods less expensive. But the drooping dollar increases inflationary pressures.

Paulson appeared on ABC's "This Week," "Fox News Sunday" and "Late Edition" on CNN. Schumer was on Fox.