Former Secretary of the Treasury Henry Paulson is still testifying before the House Committee on Oversight and Government Reform. You can watch it live on the intertubes right here. I'll update this post as interesting things crop up, but for now, it's good to see the old boy is still the greatest Chicken Little our country has yet produced.
"Had the crisis been left to unfold," Paulson says in his opening statement, "many more Americans would now be without their homes their jobs, their businesses, their savings, their way of life."
More interesting was Paulson's response when Rep. Paul Kanjorski (D-Penn.) asked him to define the "meltdown" that would have happened if he had not handed out $700 billion of other people's money:
One of the issues we dealt with at the time was concern that it would terrify the American people and lead to an even bigger problem. We didn't want to make it worse…
I try not to use hyperbole. It's impossible to prove now since it didn't happen.
I looked at it: In a world where information can flow, money can move with the speed of light electronically, I looked at the ripple effect, and looked at when a financial system fails a whole country's economic system can fail. I believe we could have gone back to the sorts of situations we saw in the Depression. I remember asking Ben Bernanke what he thought the world would look like, and he said "Well just take a look at what happened in the Depression."
I didn't spend a whole lot of time thinking about that because I knew it was going to be very bad, and I didn't want to experience very bad. I didn't want to ever get to the point where we could really understand it.
More to come. The testimony is focused on the Bank of America conspiracy theory, which in my view is mostly a distraction. Paulson was certainly the kind of official who, during a zombie outbreak, alternates between putting out bland statements urging the public to remain calm and screaming that all hell is breaking loose. But the key to his character is that he's absolutely sincere in his panic. (Although it turns out he did get in a good Colorado ski vacation in the middle of the crisis, which is more than I've managed in the last few years.)
Update: Explanation for using Troubled Asset Relief Program funds for every purpose except relieving banks of troubled assets:
Our approach was to buy those illiquid assets; that was our primary approach. We learned, as the situation began to crumble all around the world, and we needed to move quickly, we needed to change gears. And I made the decision that when the facts change you need to move quickly and change. My point wasn't that we came to Congress and asked for illiquid assets, but that, thank goodness when we came to Congress we asked for flexibility and the Congress gave us the flexibility. The people I care about are the same ones you care about, the American people, the people that are going to lose their jobs. The tragedy is that they didn't create the problem. It's the big banks that created the problem, it's a whole lot of… they didn't create the problem but they have to pay the penalty.
(He also points out, correctly, that illiquid assets have proven a lot harder to price than originally advertised.)
Update: What's good for Bank of America is good for America.
Update: All wrapped up. Thank you for joining us.