Paulson's Credibility

How does Hank Paulson keep his credibility if he bails out AIG? He just said “no more bailouts” and now Andrew Sorkin is reporting that the Fed may provide a rescue package to AIG, two days after refusing Lehman. Where is the consistency?

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0 Responses to Paulson's Credibility

  1. Seth says:

    Didn’t you answer this with your previous AIG post? Collateral damage risk. AIG knocks over lots more/bigger dominoes than Lehman.

    Of course, I’d feel better about it if there was some accountability for the executive management who pretended to have risk under control.

  2. bigring55t says:

    What he meant was no more bailouts to firms that have a history of contributing to Democrats.

  3. JR says:

    Unfortunately in a crisis lake this Paulson has to do what has to be done to prevent a global financial meltdown. AIG’s activities are worldwide and they provide financial risk insurance (ironic?) to large banks, insurance companies and other institutions.

    AIG”s collapse has happened so fast Paulson didn’t foresee its plight when he made the “no more bailouts” pledge. Lehman’s collapse has been on the horizon for months.

  4. Dan says:

    Another ten or twelve 100-billion dollar bailouts down the road, we’ll still be hearing that we “had” to come to the rescue.

    Man, I sure wish I owned a yacht factory.

  5. douglas newhouse says:

    AIG is way to interconnected to fail–Lehman was not really that important– they will be saved one way or another–if they go down the fianacial markets will really crater–this has nothing to do with party affiliaton–doug

  6. Patrick says:

    Latest news from your friendly Federal Reserve:

    Fed Readies A.I.G. Loan of $85 Billion for an 80% Stake – NY Times

  7. Alex Bowles says:

    Is it still a bailout if the Fed actually ends up owning the assets? That seems a bit different from what Detroit’s asking for now, or what Chrysler got when Iacocca was as the helm.

    Sounds to me as though Paulson is getting ready to put an entire (and very shady) banking sector out of business, and not a moment too soon.

  8. Yeah – they bailed ’em out. Great.

    As for Paulson – I don’t know if his credibility is on the line so much as his livelihood. His mug on the front cover of the WSJ last week looked like he had just left a torture room. He is receiving international pressure, in particular from China.

    Do I wish our government would let the malinvestments wash out? Yep. Would it cause a global meltdown? Unlikely. I think it could involve some serious losses in the US and globally, but I think if we adopted laissez faire we’d climb back out of it. The problem with bailing out these failing entities is that if their is any shadiness, it is encouraged, not punished. I know, I know, think of all the innocent workers under the helm of the nasty corporate execs.

    Life isn’t fair.

  9. Jon Taplin says:

    Doug-So now the taxpayers own the largest insurance company in the world. Did you ever in your wildest dreams it would get to this?

  10. Ack, sorry: if “there” is any shadiness. That typo is my nemesis! I cannot believe I fell prey to it.

  11. douglas newhouse says:

    Jon—never-never-never—- the last thing you would want to have happen–but a complete relief–can not imagine the alternative–your readers have no idea—hopefully this is the last one and we are near a bottom–the mother of all financial crisis-since 1929– but I believe that within 6-12 months credit will be available and lenders will have marketers hawking loans for new do-dads etc.–why?–because if they don;t lend money they will not have profits–the cost of loans will come down till the markets functions again—consumers will cut back but purchases will have to be made and maybe people will be more prudent and growth will be slower but we will grow and put this sorry chapter behind us–doug

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