Hank Paulson Hedge Fund: update
Big Hank went before Congress today to ask for a sizable investment into his fund. He says he needs $700 billion from us, and congressional folks are so far trying to sate him somewhat by contributing $150 billion over the next couple months. The questions are many, and for those of us who are not money market, credit, derivative, TED, swaps experts, they are a bit overwhelming.
Here are the main issues:
- Should we give Paulson a blank check so that he can, according to Senator Dodd, “act with absolute impunity“, in rescuing our nation’s financial system?
- What amount of money will be sufficient to overwhelm the system in order to restore confidence?
- What exactly does the plan/bailout entail? Sen. Dodd, commenting on the Treasury’s plan, called it, “stunning and unprecedented in its scope and lack of detail.”
- How can we be sure this plan will not fail? Clearly that is an impossible question to answer, but those in power need to get this right, the first time. In truth, this needs to happen, as unfortunate as it is for each of us that pays taxes. Also, it needs to happen within the next week.
- How will this plan help to stem foreclosures? HPHF will be buying risky mortgages so that lending can again take place in the market as a whole. Will HPHF renegotiate with homeowners on their mortgages, or allow them extra time to refinance at a fixed rate?
Please enjoy some great quotes from the testimony today:
Sen. Bunning said the plan would, “take Wall Street’s pain and spread it to the taxpayers. It’s financial socialism, and it’s un-American.”
Ben ‘the beard’ Bernanke, “if financial conditions fail to improve for a protracted period, the implications for the broader economy could be quite adverse.”
Sen. Schumer, “Even on Wall Street, $700 billion is a lot of money.”
January 8th, 2009 at 2:10 am
Thanks for the info….
January 8th, 2009 at 9:42 am
Good content as always.