Hank Paulson's Prepared Testimony Ahead Of Tomorrow's Hearings
This is December 2008:
Moreover, based on my own experience working in financial markets, I knew that the attempt to revoke the merger contract would have caused great uncertainty and fear in the market, would likely have caused the markets to question Bank of America’s financial strength and managerial competence, and would have led to rating downgrades, weakened liquidity, possible failure and, of course, regulatory action. In short, Bank of America’s completion of the merger, and the subsequent assistance from the government, not only protected our country’s financial system, but also was in the best interest of the shareholders, customers, employees, and creditors of Bank of America and Merrill Lynch. Or, as Mr. Lewis put it, “there was serious risk to declaring a material adverse change and . . . proceeding with the transaction with governmental support was the better course. This course made sense for Bank of America and its shareholders, and it made sense for the stability of the markets.”
Yet a mere 6 months later, everything is supposed to be so much better? Good thing HFTs have been buying i7 server cores to bottlerocket the market straight up in a closed loop. Sigh.
Some more amusement:
I believe my remarks to Mr. Lewis were appropriate. I explained to him that the government was supportive of Bank of America, but that it felt very strongly that if Bank of America exercised the MAC clause, such an action would show a colossal lack of judgment and would jeopardize Bank of America, Merrill Lynch, and the financial system. I further explained to him that, under such circumstances, the Federal Reserve could exercise its authority to remove management and the board of Bank of America. By referring to the Federal Reserve’s supervisory powers, I intended to deliver a strong message reinforcing the view that had been consistently expressed by the Federal Reserve[.]... I note that what I said echoes sentiments expressed in internal Federal Reserve emails, including the sentiment attributed to Chairman Bernanke in a December 20, 2008 email from Jeffrey Lacker, in which Chairman Bernanke is said to have remarked the he “intend[ed] to make it even more clear that if [Bank of America] plays that card [invokes the MAC clause] and then need[s] assistance, management is gone.” Chairman Bernanke, when he appeared before this committee in June, put it this way: “ . . . I don’t think it’s unreasonable if someone makes a decision that endangers his company, that he’d be accountable for that.”
This is the same Federal Reserve that the hundred some economists below DO NOT WANT TO HAVE AUDITED? Regardless, all shall be well - tomorrow, Hank is sure to demonstrate the same kind of Amnesia that the Fed Chairman proved is so convenient when answering a question could lead to much more severe repercussions:
Although attention has recently focused on brief moments of stress during the events of December 2008, those moments are not foremost in my recollection.
If nothing else, tomorrow will prove some more good, cheap entertainment: in addition to artificially inflated 401(k)'s, that's what America values more than anything.