Buffett Deal at Goldman Is Seen as a Sign of Confidence blares the New York Times headline. But is Warren Buffet confident in the company, or in former Goldman-Sachs CEO Henry Paulson?
"An open, competitive, and liberalized financial market can effectively allocate scarce resources in a manner that promotes stability and prosperity far better than governmental intervention, Paulson told the Shanghai Futures Exchange 18 months ago, according to Bloomberg.com. The Chinese weren't buying it then, and they're certainly not buying now.
"It's ironic Paulson has become the manager of many large financial institutions," said Wang Jun, a finance specialist at the World Bank in Beijing. "He will have to ask the Chinese leaders about their experience of managing state-owned assets."
He's off to a good start, asking Congress for $700 billion --more or less-- with no checks and balances. Or, rather, checks from Main Street to balance Wall Street's books. Evidently, Paulson was sent up the Hill because he had more credibility than President George Bush. Isn't that setting the bar a little low?
What a difference a decade makes. As Bloomberg rudely notes: "Thailand, South Korea and Indonesia were urged to let unviable banks fail during the 1997-98 Asian financial crisis."
Now, according to another Bloomberg article "Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke signaled that their priority is shoring up the nation's banks even if it means they don't get taxpayers the cheapest prices for the devalued assets the government buys."
It's nice to have friends.
But it looks like the Democrats and Republicans will insist on bipartisan oversight. Something like the House and Senate committees who have ignored the problem for years while raking in contributions-- in a bipartisan fashion.
At least that dooms the proposal's section 8: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency." The Chinese would appreciate that one.
Oh, and what Bernanke and Paulson were saying last year