Paulson says banking system has been ‘stabilized’
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Treasury Secretary Henry M. Paulson said today that he believed the banking system had been ‘stabilized,’ and he implied that there was no major institution likely to present a problem that would shock regulators.
Here’s Paulson in an interview with Robert Siegel on NPR News’ ‘All Things Considered’:
Siegel: You said yesterday, overall, we’re in a better position than we were. That’s a modest statement of progress, but it’s a statement of progress. How can you tell Americans who are listening something that’s happened, something that should have affected their lives by now, that is a tribute to the nearly $300 billion that has already been committed by the U.S. government [to a banking bailout]? Paulson: Yeah, I would say the first thing I would say to Americans, what we were dealing with was, we were dealing with a financial system, a banking system that was on the tipping point. Credit was frozen. Banks weren’t lending to each other. People were asking themselves about the viability of banks. I believe the banking system has been stabilized. No one is asking themselves anymore, is there some major institution that might fail and that we would not be able to do anything about it. So I think that is a positive. I think in terms of the challenges, in terms of working through this economic downturn. Let me tell you, it took a long time to build up these excesses. It’s going to take a good while to work through this period. And the first focus, as I said yesterday, should be on recovery and repair. And it’s going to take a while longer to work through it. Siegel: But just to clarify, you’re saying no one is saying now there could be a failure of a major institution that we wouldn’t be able to deal with. There could be a failure of another major institution, though. Paulson: I got to tell you, I think our major institutions have been stabilized. I believe that very strongly.
So, after Bear Stearns, IndyMac Bank, Fannie Mae, Freddie Mac, Lehman Bros., Washington Mutual and American International Group -- no more major surprises.
Write it down, folks.