Courtesy of Bruce Krasting.
Former Treasury Secretary Hank Paulson has been coming out of the closet and doing some talking, He spoke on Bloomberg the other day, (Link). He was asked about the record profit of $17B at Fannie Mae in 2012. He said:
“Well, I read the Wall Street Journal and the Washington Post today, and I had to pinch myself. I could hardly believe what I was reading.”
It was Paulson who officially put Fannie and Freddie (F/F) into concervatorship. That was four and half long years ago. Paulson made a bunch of critical decisions in those chaotic months. From the very beginning I wondered why he did not take F/F into bankruptcy. It would have been cleaner that way. The Treasury Department had to assume the mortgage debts of F/F. If they had not, the lights would have gone off, and they would still be off today. So that was a no-brainer. But why did Paulson not take the opportunity to blow up the equity in F/F?
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