By Greg Gordon | McClatchy Newspapers
WASHINGTON — Henry Paulson has received widespread acclaim for his bare-knuckled decision-making as the treasury secretary at the peak of the 2008 financial crisis, but former federal regulators say he missed multiple chances to contain the disaster.
Among the prime beneficiaries of Paulson's inaction in 2006 and 2007 was Goldman Sachs, the investment banking behemoth he ran before he was named to former President George W. Bush's Cabinet.
Paulson's failure to take steps to curb risky mortgage lending also enabled top executives of other Wall Street firms to continue cashing big bonus checks, while less privileged Americans lost their jobs, their homes and their retirement savings in the worst economic catastrophe since the Great Depression.
Paulson and Federal Reserve Chairman Ben Bernanke have been widely praised for engineering the Wall Street bailouts, which avoided systemic chaos, and they'll probably get more plaudits if the government recovers much of the $400 billion in loans it made to financial institutions.
However, while Paulson has been criticized, unfairly or not, because $12.9 billion of the bailout money went to Goldman, he's drawn little scrutiny for what he did in his first 18 months in office, during the final frenzied stages of the housing bubble.
* "No one was better positioned . . . than Mr. Paulson to understand exactly what the implications of his moving against the (housing) bubble would have been for Goldman Sachs, because he knew what the Goldman Sachs positions were," said William Black, a former senior thrift regulator who delivered the harshest criticism of the former secretary.
Paulson "knew that if he acted the way he should, that would have burst the bubble. Then Goldman Sachs would have been left with a very substantial loss, and that would have been the end of bonuses at Goldman Sachs."
*Gee..It's about time these guys caught up..
Better late then never..