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nostalgia1 year ago

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Less than a month ago Paulson insisted over and over to the Senate and House that injecting capital into financial institutions was not the right approach.

Paulson told the Senate Banking Committee: “There were some that said we should just go and stick capital in the banks, put preferred stocks, stick capital in the banks. And that’s what you do when you have failures. You know, that’s what happened in Japan. That’s what happened in other spots. And we have dealt with some failures. And we’ve dealt with them where there’s capital. But we said, the right way to do this is not going around and using guarantees or injecting capital, and there’s been various proposals to do that, but to use market mechanisms.”

Two days later, he told the House Financial Services Committee: “There are a number of plans which say, ‘Let’s go to the root of the problem. Let’s just put capital in those institutions which we think are troubled.’ And that is one about dealing with failure, OK? And when you put capital in, that’s the Japanese solution. They were in a very long recession for many years, but what they did is they came in — you know, you put capital in the banks and then the government is essentially, in many ways, running them. So you’re sticking preferred stock in. What we are trying to do, we’re trying to take a different approach, which is, this is a different situation than anything you can find historically.”

http://blogs.wsj.com/economics/2008/10/14/the-evol...

Why did Paulson change his mind and infuse cash into the banks?
As I recall, Japan was in a recession for a decade after trying this
Paulson was right a month ago.
Now we are using the same approach Japan did but expect different results?

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  alakazam1 year ago
  
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  Maybe the "REAL" power brokers got to him.
  
  Perhaps he like many had a price.
  
  We have been sold boys and girls...lock, stock and barrel.
  
  I am not going quietly to the auction block...are you?
  
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