Paulson grilled on Capitol Hill

By Dan Fabrizio

Published: November 18, 2008

In Washington, Congress heard all about bailouts Tuesday.

The one automakers desperately need and the financial bailout the Bush Administration is defending.

It was the first time Treasury Secretary Henry Paulson faced lawmakers in public since he announced he would not be using the bailout money to buy bad debt as he’d promised.
In the few weeks between asking for the 700 billion and spending it, the economy tanked.

Financial markets hit record lows. 

Credit froze almost completely.

Treasury Secretary Paulson says that forced him to change course.

“We took decisive action to prevent the collapse of our financial system,“ said Paulson.

Instead of buying bad mortgage debt, as promised Paulson bought stock in banks so those banks could lend the government’s money.

“When the facts changed and the circumstances changed, we changed the strategy. We didn’t implement a flawed strategy. We implemented one that worked,“ said Paulson.

“I’m sorry, Mr. Secretary those are not substitutable,“ said Democratic Congressman Barney Frank of Massachusetts.

Some lawmakers are concerned the original intent to help homeowners has been lost.

“I’m disappointed you have not utilized the authority, and have just divorced yourself from dealing with that,“ said Democratic Congresswoman Maxine Waters of California.

Congress is also concerned the Federal Reserve is not naming banks that borrow from its new lending facility.

Fed chair Ben Bernanke explained why some secrecy is necessary.

“If we put the names in the newspaper, others might begin to worry ‘is the bank creditworthy?‘ and that would create a stigma making them unwilling to borrow,“ said Bernanke.

Now, Congress wants to use 25 billion of the bailout money to save automakers from bankruptcy.