Paulson Trying to Rewrite His Own History

by: Bespoke Investment Group

Treasury Secretary Henry Paulson spoke at the Reagan Library this afternoon, and judging by the speech, it appears as though Mr. Paulson is embarking on a PR campaign to rewrite the history of his handling of the credit crisis.  One line that stood out was when he said, "By pro-actively addressing the problems we saw coming..." 

Judging by excerpts of prior comments the Treasury Secretary made during 2007, if Mr. Paulson saw the problems coming, he wasn't telling anybody:

Marketwatch 3/13/07: Paulson also said the fallout in subprime mortgages is "going to be painful to some lenders, but it is largely contained."

Reuters 4/20/07: "I don't see (subprime mortgage market troubles) imposing a serious problem. I think it's going to be largely contained."

Bloomberg 5/22/07: Paulson, also speaking to CNBC, said the housing slump was ``largely contained'' and that market's correction was mostly ``behind us.''

Bloomberg 6/20/07: Subprime fallout ``will not affect the economy overall.''

Forbes 7/27/07: Appearing on CNBC with other members of the Bush administration's economic team, he again said mortgage industry problems would be 'largely contained.'

Boston.com 8/1/07: Paulson added that he did not see anything that caused him to reconsider his view that the economic damage from the housing correction was "largely contained."

Another classic line from today was, "As I assess our current situation, I believe we have taken the necessary steps to prevent a financial collapse."  Mr. Paulson, what is it going to take for you to consider this a financial collapse? 

Given that the extent of the credit crisis was underestimated by almost everyone, you can give Paulson somewhat of a pass for missing it.  But to try and rewrite history through speeches even while the credit crisis is still playing out is inexcusable.