What are Paulson and Bernanke Saying?

Bernanke and Paulson are testifying before the House Financial Services Committee and these are their comments (this list will be growing as they speak, so check back often)

Bernanke’s Comments
– Some Signs Credit Market Are Improving
– Credit Conditions Still Far From Normal
– Injection of TARP Capital Critical to Confidence
– Banks Should Review Compensation to Curb Risk Taking
– Says Banks Should Set Appropriate Dividend Policies
10:26am ET Additions
– Revealing Borrowers is Counterproductive
10:56am ET Additions
– Overwhelming Amount of Fed Lending Quite Safe
– Fed Needs to Do What’s Needed to Keep System Viable
– Sees No Significant Credit Risk in Fed Policy
– We Need to Do A lot More to Prevent Foreclosure
11:21am ET Additions
– FDIC Foreclosure Effort Very Promising
– AIG Rescue is to Avoid Contagion of Losses
– Dollar Remains the Premier Currency
– Current Account Imbalances Very Serious Issue
– Foreclosures a Symptom and a Cause of Crisis
12:07pm ET Additions
Crisis Not a Failure of Capitalism

My Take: Nothing meaningful from Bernanke. He’ll be staying on as Fed Chairman so he has more of an interest in doing what is needed at this time than Paulson. He still thinks that there is a long road ahead to stabilizing the credit markets and confidence. No surprises there.

Paulson’s Comments
– TARP Not Panacea for All Our Economic Difficulties
– Rescue Package Wasn’t an Economy Stimulus Program
– Credit Recovery to Determine Speed of Economy Rebound
– No TARP Firepower Left to Buy Distressed Assets
– Economic Slowdown May Prolong Housing Slump
– No Plans for Using Remainder of TARP Funds
– See Modest TARP Funds Aiding a Fed ABS Facility
– Fed Facility Can Help Consumer Credit
– Best Emphasis for TARP is Capital Injections
10:26am ET Additions
– Financial Market Stress Hurts the Economy
– Economy Has Continued to Get Worse
– Our Purpose for TARP Was Protecting Capital Market
– AIG would have failed without Fed Stepping in
– Will Keep Looking for Ways to Ease Foreclosures
– We’ve Turned a Corner Stabilizing Markets
– Will Take A lot of Work to Revive the Economy
10:56am ET Additions
– When Facts Changed, We Changed the Strategy
– TARP Was Aimed at Financial System
– Not a Good Thing Having US Automaker Fail
– Automaker Solution Needs to Have Viability
– There are Other ways to Help Automakers
– TARP has Broad Definition of Financial Firms
– Auto Companies Fall Outside that Definition
– I Have Not Said No To Mortgage Help in TARP
– Working Hard to Prevent Windfall for Banks
– TARP in Process Developing Insurance Program
– No Decisions Made on Other Uses for TARP
– Definitely Capital Available for Some Firms
– Premature to Start Another TARP Capital Program
11:21am ET Additions

– Not Surprising to See Good Number Foreclosures
– Key to Housing Turnaround is More Bank Lending
– Stabilizing Fannie and Freddie Has Been critical
– More Needs to be Done to Help US Homeowners
– FDIC’s Indymac Plan is an Excellent Protocol
11:55am ET Additions
– TARP Not Designed to Prop Up Weaker Banks
– TARP Designed to for Healthy Banks
– Important to Stop Cascade of Foreclosures
– Treasury’s TARP Went to the Heart of the Turmoil
– There Was No Law to Allow Lehman to be Saved
– Not Desirable if US Car Maker Fails
– Unusual if Government Doesn’t Get TARP Funds Back
– Will Issue $1.5 Trillion in Treasuries this Year
12:07pm ET Additions
– Urges Congress to Use Non-TARP Funds for Carmakers
– Many Community Banks Expected to Apply for TARP

Testimony has ended


My Take: Paulson is cleaning his hands of the financial market mess and reconfirming that there are no plans to use the remainder of the TARP fund. Ahead of next week’s GDP data, which should indicate that the US economy has fallen into a recession, Paulson is covering himself by saying that the TARP was never an economic stimulus program.


  1. Hi Lien,

    Thank you for the informative knowledge.


    Wishing one day you could become the Prime Minister as a currency strategist.




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