Paulson Warns Against Regulation Overkill

Treasury Secretary Sees "Long-Term Harm" To Economy If U.S., World Adopt Severe Regulation

(CBS/AP)  Treasury Secretary Henry Paulson called the financial crisis now plaguing the world economy a "once or twice" in a 100 years event, even as he warned Thursday against imposing too-strict regulations to prevent a repeat calamity.

Paulson's remarks follow pledges by world leaders attending last week's emergency economic summit to begin an overhaul of the world's financial regulatory system.

With the next summit slated for the spring, the work on fleshing out details for the Herculean task will fall to the incoming administration of President-elect Barack Obama and his new Treasury secretary.

Paulson, whose boss President George W. Bush leaves office on Jan. 20, acknowledged that the financial crisis was caused by many factors including "government inaction and mistaken actions, outdated U.S. and global financial regulatory systems, and by the excessive risk-taking of financial institutions."

Still, he cautioned against the U.S. and other countries developing a too-onerous regulatory response.

"If we do not correctly diagnose the causes, and instead act in haste to implement more rather than better regulations, we can do long-term harm," Paulson said in a speech in Simi Valley, Calif.

Paulson's remarks followed more grim economic news, as new claims filed for unemployment insurance zoomed last week to 542,000, the highest since the summer of 1992, when the nation was recovering from a recession, the Labor Department reported.

Congressional leaders also indicated Thursday that they would put off any vote on an auto industry bailout until next month in the face of steady resistance from the Bush administration, despite the fact that a bipartisan group of several lawmakers announced a compromise proposal on a rescue package for Detroit's Big Three automakers.

Earlier this week, lawmakers blasted Paulson for his handling of a $700 billion financial bailout package to help ease the crisis and restore stability and confidence to unhinged markets.

Paulson on Thursday again defended his management, including his decision last week to officially abandon the original rescue strategy: buying rotten mortgages and other bad debts from banks to free up their balance sheets and get them to lend more freely.

"By proactively addressing the problems we saw coming and being pragmatic enough to change strategy in the face of changed facts and despite the inevitable criticism - we prevented a far worse financial crisis," Paulson insisted.

Focusing the bailout program on infusing billions into banks - and possibly other types of companies - to pump up their capital and bolster lending to customers was deemed a faster and more effective approach to stabilizing the financial system than the original centerpiece of the plan, he said.

"There was no playbook for responding to a once or twice in a hundred year event," Paulson argued, saying he needed to shift strategy to respond to worsening financial and economic conditions.

Paulson again said he believed the Bush administration has taken the necessary steps to prevent a financial market collapse, but he cautioned that it will take time for markets and lending conditions to return to normal.

[cjs_cnet_xyz]

Paulson, you cannot hold onto idealistic beliefs of how the economy should or shouldn''t be regulated when the government led the taxpayer to a point of paying 700 billion for financial failures. The regulation train is coming right after the one that demanded 700 billion of the taxpayer''s dollars.

[punkinpie1]

I hope I am the last one here to comment on this story. I think there are a lot of people on this message board that have been hurt by this administration. Our civil liberties have been violated by Mr. Bush and Chenney and their colleques of their administration. I have reviewed some of your comments about this story. I think we need to try to come together as a country and work through these difficult times. We''ve done before we can do it again America! I wish everyone lost of luck. I hope and pray that in a year we will be in a better position. I love this country I hope we can safely recover from this horrible nightmare.

[punkinpie1]

I hope I am the last one here to comment on this story. I think there are a lot of people on this message board that have been hurt by this administration. Our civil liberties have been violated by Mr. Bush and Chenney and their colleques of their administration. I have reviewed some of your comments about this story. I think we need to try to come together as a country and work through these difficult times. We''ve done before we can do it again America! I wish everyone lost of luck. I hope and pray that in a year we will be in a better position. I love this country I hope we can safely recover from this horrible nightmare.

[punkinpie1]

I think Paulson should not only resign but he should be put on some kind of trial. Everybody here seems to forget that Paulson is just part of this inept administration. Lets face it His boss isn''t dealing with a full deck. That elevator hasn''t gone all the way up to the top here.

[dkhorse1]

Paulson should resign from his government post immediately. He clearly belongs in the private sector where he can play with the private money of private citizens who are stupid enough to let him do so. Paulson should never have been allowed to come into such close proximity to taxpayer treasure. He is just another loudmouthed, opinionated, inept and, at the end of day, rather stupid man in the Bush administration. Congress needs to watch and control this man very carefully so that the amount of damage he does before January 21 can be contained.

________________________________________
Posted by peter776 at 04:38 PM : Nov 21, 2008

Nobody b!tches before an event, but after, suddenly everyone is an expert criticizing others after the fact. The ultimate Monday morning quarterbacking!


Point made!

[peter776-2009]

Paulson should resign from his government post immediately. He clearly belongs in the private sector where he can play with the private money of private citizens who are stupid enough to let him do so. Paulson should never have been allowed to come into such close proximity to taxpayer treasure. He is just another loudmouthed, opinionated, inept and, at the end of day, rather stupid man in the Bush administration. Congress needs to watch and control this man very carefully so that the amount of damage he does before January 21 can be contained.

[punkinpie1]

As usual the Bush likes to help like the usual trickle
down the way they know best.

[punkinpie1]

Wouldn''t it be funny to see Bush in a nice set of handcuff when Obama takes office!

[punkinpie1]

Paulson is an idiot!

[punkinpie1]

You people don''t understand that people like the Bush administration want less government so there is nobody
watching out what is the next thing they get a way with murder with.

[punkinpie1]

I would like to see most of Bush administration get arrested for impersonationing a presidental administration. Wake up America most of you voted and put those people in office. You have nobody to blame but yourselves. I don''t take credit either time because I didn''t vote for those idiots!

[punkinpie1]

Paulson will not resign til his administration has thrown the last punch. He isn''t done with sticking his last needle in the American taxpayers. Unfortunately we have no power to boot him off the
island like they do in survior.

[bombadil4]

Yeah now that they''ve focked us with overkill on deregulation, they feed us this bu''''sh''t about not using overkill on regulations. Same way these clowns have distributed all the wealth to themselves and then warn us that any "redistribution" would lead us into the evil arms of socialism. Could we please for once not buy into this nonsense? There is only one kind of "trickle down" and you guys know what that is--it''s when you''re at the urinal and you don''t quite get the dinky-doo out far enough and you hope no one at the meeting notices the stain on your pants.

[torva-2009]

Ever wonder what Paulson''s next job is going to be?!?!? I''m sure glad I don''t have to hunt for job with his resume...his last year is gonna be a killer - for all of us!

[newsjunky5]

And he''s the guy who knows all about hurting an economy. Does anyone take him seriously who isn''t in line for bailout money.

[mitch5511]

Paulson needs to shut up. He lost his credibility.

[lsipela]

Why is he saying "Regulation overkill"? We had "Regulation underkill" for the last 8 years that has brought us to this economic mess!

[irmcvet97]

Boy those markets they''''re showing tremendous confidence in our new kindergarten president elect.

Posted by standlee5 at 01:33 AM : Nov 21, 2008

You 6th grade drop outs are so embarrassing!! LOL Just this morning the HEADLINES are out there about the Market rebounding on hopes of the sale of Citibank and this poor embarrassing little Ditto Head just posted what he was told. We are in the middle of a financial crisis the likes of which even the Bush People admit is the worst in our lifetimes. Yet this uneducated loser wants to continue down the same path we''re on... doesn''t have the courage to say it so he buys this made up trash about Obama. Why would ANYONE want to continue the SAME policies that gave us the crisis. PLEASE, pick up a night class or two... LEARN to read and think for yourself.

[whitemale08]

What the hell are you talking about?

You talk like we''re in ''post-crisis'' and now it''s time to create a new government dept. of "Lessons Learned".

Don''t make me laugh, get your stupid a** off the stage.

You''re a stuttering babbling idiot.

[punkinpie1]

I know I sound bitter. I have good reason to feel this way. On Nov 18th of 2008 I got layed off like many others out there. We need these regulations to protect people like myself from idiots like these CEOs who have gotten away with this nonesense.