Two months ago, when credit markets around the world were freezing up in panic over failed mortgages, Treasury Secretary Henry M. Paulson Jr. said that he was confident investors would work things out for themselves reports the New York Times.
“We’re going to work through this problem just fine,” he said in an interview with CNBC on Aug. 21. “I think what the American people need to understand, these things take a while to play out.”
Mr. Paulson says he still holds that view. But in a sign that administration officials are more worried about underlying problems in the markets than they had previously let on, Mr. Paulson and other top Treasury officials are prodding and pushing Wall Street firms and the mortgage industry to come up with solutions — and helping devise some of them as well.
The plan announced Monday involves no money from taxpayers, and it was negotiated primarily between the banks themselves. But it highlighted Mr. Paulson’s growing effort to marry two competing goals of the Bush administration: to stabilize the battered markets for mortgages and housing, but to avoid a government bailout that might encourage investors to take even bigger risks in the future — what economists call “moral hazard.”
Read it here: Treasury Chief Aims to Steady Credit Markets