It's been almost two years since Hank Paulson took over as Treasury Secretary. I was not sure why he wanted the job, but I speculated that he might have taken it because it would give him a chance to outshine fellow Goldman Sachs Group (NYSE: GS) alumnus Robert Rubin when a financial crisis arose.
Well, he's got his crisis now. Today, The Associated Press reports that Paulson spent quite a bit of time on the news shows talking about how the The Bush administration will "do what it takes" to stabilize chaotic markets and minimize the economic damage. But his plan to save Structured Investment Vehicles (SIVs) dissolved, his subprime rescue plan fizzled, and subprime refused to remain contained as he said it would last spring.
Rubin demonstrated his mettle in handling several financial crises such as the Mexican financial crisis and the Russian financial meltdown in 1998. While Rubin has hardly distinguished himself at Citigroup (NYSE: C), nothing can take away his finesse in handling those financial crises.
I wish Paulson had such skill because the crisis we now face is immeasurably more challenging than the ones that Rubin solved.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns Citigroup stock and has no financial interest in the other securities mentioned.
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Reader Comments (Page 1 of 1)
3-16-2008 @ 10:04PM
John said...
Well, I think it will be exceedingly important to elect a Republican President and a Republican congress.
'cause it's obvious they are grownups who know how to handle money. LMAO.
3-17-2008 @ 12:06AM
ZIRP said...
Hi Peter
Just came across the blog this morning. Great stuff and much appreciated.
Regards
3-16-2008 @ 11:58PM
George S said...
You must be joking right or being sarcastic...I hope? GWB is the reason why we have this bad economy. The warnings of this housing bubble that will create a financial havoc were all over the news in 2005 but what did our government do...NONE. You don't need a smart person to ACT and INVESTIGATE just a person with COMMON SENSE and INTEGRITY. We've spent $200 billion dollars to finance the Iraq war instead of creating jobs to keep the economy strong. VOTE for a DEMOCRAT!
3-17-2008 @ 7:55AM
Michael Schneider said...
Most people missed the magnitude of the subprime and foreclosure problems early on but the hope is that some of turmoil is better understood at this point.