Paulson Warns Of More Tough Times

(AP)  Treasury Secretary Henry Paulson sought to reassure an anxious public Sunday that the banking system is sound, while also bracing people for more troubled times ahead.

"I think it's going to be months that we're working our way through this period - clearly months," he said.

Paulson said the number of troubled banks will increase as they struggle to cope with big losses on bad mortgages. The government this month took over IndyMac after a run led it to become the largest regulated thrift to fail.

"Of course the list is going to grow longer given the stresses we have in the marketplace, given the housing correction. But again, it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation," he said on Face The Nation.

Paulson used appearances on the Sunday talk shows to tell people that deposits up to $100,000 are fully insured. He said no one has lost a single penny on an insured deposit in the 75 years that the Federal Deposit Insurance Corporation has operated.

"We're going through a challenging time with our economy. This is a tough time. The three big issues we're facing right now are, first, the housing correction which is at the heart of the slowdown; secondly, turmoil of the capital markets; and thirdly, the high oil prices, which are going to prolong the slowdown," he said.

"But remember, our economy has got very strong long-term fundamentals, solid fundamentals. And you know, your policy-makers here, regulators, we're being very vigilant."

Paulson said he hoped Congress soon would approve his plan to help shore up Fannie Mae and Freddie Mac, the government-sponsored mortgage companies

"I'm very optimistic that we're going to get what we need from Congress here, because Congress understands how important these institutions are," Paulson said.

The House plans to vote Wednesday on a housing bill that is expected to include a rescue for Fannie Mae and Freddie Mac. The companies' shares have plummeted because of fears about their financial stability. Fannie Mae and Freddie Mac are private, but they were created by Congress to encourage homeownership by buying mortgages from banks. The two hold or guarantee more than $5 trillion in home loans - almost half of the nation's total.

"Our first priority today is the stability of the capital markets, the stability of the system. And these institutions have investors all around the world ... and those investors need to know that we in the United States of America understand the importance of these institutions to our capital markets and to our economy and to our housing market," he added.

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Read the full "Face the Nation" transcript here.

By CBSNews.com producer David Morgan.

[wardoglrs]

I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them. Thomas Jefferson

"Paper is poverty,... it is only the ghost of money, and not money itself." Thomas Jefferson to Edward Carrington, 1788


President FDR (on Fascist rule in a letter to corporate con man %u201CColonel%u201D Edward M. House, a founder of the Council on Foreign Relations and political fixer for the ruling class. House also handled President Wilson for the foisting of the privately rigged %u201CFederal Reserve%u201D Corp bank monopoly. 11/21/ 1933)

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." - Thomas Jefferson, Letter to Treasury Secretary Albert Gallatin (1802)

When all government, domestic and foreign, in little as in great things, shall be drawn to Washington as the center of all power, it will render powerless the checks provided of one government on another, and will become as venal and oppressive as the government from which we separated - Thomas

[justspiffy]

People can vote for McCain and if they do they haven''t seen anything yet as far as the deficit and spending. He wants to continue this invasion.

[brianbwb-2009]

When all the presidents starting with Reagan were calling their credit fueled temporary economic bumps proof the the US economy was doing well, some of us knew that the day would come when that credit could no longer be rolled over at ever higher interest rates, while the middle class was being decimated by income loss due to the devaluing dollar, and the outsourcing of the US labor to slave nations.

Well, that day has come, and now the same economists who sang the praises of "trickle down" economics are now claiming they can''t figure out how to get out of this mess?

I posited at the outset of "Desert Storm" that the neocon belief in a war economy was obsolete, now we have had seven years of war between the two Bush administrations, and nothing to show for it but debt, and a collapsing economy.

[mcvet]

Another Fed clown-show. The banks are sound, but they''''re going to collapse. Better buy ammunition while you can. Nothing else will have any value.

Posted by SistaTee at 01:05 AM : Jul 21, 2008

Yep! It''s amazing ONE PARTY and ONE LEADER can take us from a Balanced Budget and Surplus to this in LESS than 7 years. When the Fascist took office, the Regulations and Laws in place would NEVER have allowed this to happen. Now, after Dr. Phil and Deregulation of ALL Banks, we have this. Great job all you Fascist! Old Joe McCarthy would be proud!! SIEG HEIL BUSH

[daysrnumbrd]

This administration is more like that of Hoover. Just as they had ''''Hoovervilles'''' back in the Depression of the ''''30s, we may start seeing ''''Bushvilles''''.

Posted by ofbyfor1 at 06:43 AM : Jul 21, 2008
...............

"Bushvilles" are currently located in parts of Southern Louisiana.... distinguishable by Formaldehyde fumed FEMA trailers.

[jmurrieta1]

This whole Republican administration is a band of freaks--and I don''t mean that in a good way.

From the smirking, dancing Bush to the menacing serial killer Cheney to the owlish, blinking Paulson, they''re all in way over their heads.

And the Republicans put them there. And the Republican-ruled Congress didn''t even let out a peep as they ran up the national debt by over 50%.

Let''s hope the American Sheeple can remember that simple fact as long into the future as November.

Of course there may be a new TV show to make them forget.

[ofbyfor1]

The (current) crop of government officials and this current criminal regime in the White House do not believe in government programs to help the working class, and to rebuild the infrastructure of this country as the Roosevelt administration did during the Great Depression of the 1930s.

Posted by DaysRnumbrd at 06:29 PM : Jul 20, 2008

This administration is more like that of Hoover. Just as they had ''Hoovervilles'' back in the Depression of the ''30s, we may start seeing ''Bushvilles''.

[Gary Kempf]

Treasury Secretary Henry Paulson

Is a prime example of a mental migit.......

[brianbwb-2009]

"That is what I am going to do then life goes on inflation is not high, unemployment is low, there has not been a single quarter without some growth..." Posted by dmw1167

The Wall street journal would disagree with you,

"The fact that the economy has continued to grow while unemployment has shot up hints that adverse economic conditions have not fully made themselves felt in consumer spending. This is likely due to the effect of the $78 billion in tax rebates recently sent out by the government, which may have temporarily boosted consumer expenditures. Once those rebates are spent, however, it is likely that the economy will begin to contract and the current hemorrhaging of jobs will only accelerate. According to a recent survey, consumer confidence has sunk to its lowest level in 16 years.

All the while, real wages have continued to plummet. Median wages have increased by 2.8 percent in the past year; the Consumer Price Index rose by over 4 percent during the same period. This adds up to a decrease in median real wages of over 1.2 percent..."

[brianbwb-2009]

"That is what I am going to do then life goes on inflation is not high, unemployment is low, there has not been a single quarter without some growth..." Posted by dmw1167

The Wall street journal would disagree with you,

"The fact that the economy has continued to grow while unemployment has shot up hints that adverse economic conditions have not fully made themselves felt in consumer spending. This is likely due to the effect of the $78 billion in tax rebates recently sent out by the government, which may have temporarily boosted consumer expenditures. Once those rebates are spent, however, it is likely that the economy will begin to contract and the current hemorrhaging of jobs will only accelerate. According to a recent survey, consumer confidence has sunk to its lowest level in 16 years.

All the while, real wages have continued to plummet. Median wages have increased by 2.8 percent in the past year; the Consumer Price Index rose by over 4 percent during the same period. This adds up to a decrease in median real wages of over 1.2 percent..."