Henry Hank Paulson ..."I am not a crook"
Now ....
I know I have heard that before.
Liar, reptilian freak.
Financial Crisis: Hank Paulson warns of more bank failures
More banks will fail in the weeks ahead despite dramatic moves by policymakers across the world to tackle the financial crisis, the US Treasury Secretary admitted last night.
In comments which sent share prices in Wall Street tumbling, Hank Paulson warned that the crisis would claim further victims and ruled out a "grand plan" for an international bail-out of the financial system.
His comments came at the end of another fraught day in markets worldwide as investors reacted nervously to unprecedented co-ordinated interest rate cuts by central banks across the Western world.
Mr Paulson, who last week successfully steered his $700bn Emergency Economic Stabilization Act (EESA) through Congress, warned that the scheme and the half percentage point interest rate cuts in countries including the UK and the US would not be enough to prevent more financial institutions from imploding.
"One thing we must recognise: even with the new Treasury authorities, some financial institutions will fail," he said. "The EESA doesn't exist to save every financial institution for its own sake."
Neither should investors expect a quick recovery in the markets, he added.
"It is too early to look for encouraging signs in credit markets," he said. "It's going to take a while to work through this problem."
Within minutes of the warning the Dow Jones tumbled from its afternoon peak of 9575 points to close down 2pc or 189 points at 9258.1.
Meanwhile, Treasury yields had their biggest one-day rise in more than a decade.
The comments come ahead of the Group of Seven meeting of finance ministers in Washington tomorrow. Markets had been bubbling with rumours that ministers would hatch a co-ordinated plan to pour public cash into struggling banks, but Mr Paulson dismissed such hopes.
"When you look at the G7 you've got very different countries' economies with different-sized financial systems and different needs so it would not make sense to have identical policies," he said.
He added that the credit squeeze was likely to persevere for some time, and admitted that the Trouble Asset Relief Program (TARP), which aims to buy up the illiquid financial instruments at the heart of the sub-prime crisis, would take some time to kick into action.
"We expect it will be several weeks before our first purchase," he said.
However, he did not rule out using the powers granted to the Treasury by the bill to move one step further and actively buy banks' shares in order to recapitalise their balance sheets.
Such a move would mirror the dramatic £50bn bail-out confirmed by Alistair Darling for the UK yesterday. Although he insisted the creation of the TARP was going well, he admitted he had not yet found anyone to lead the project.
With a number of US and European banks having collapsed in recent weeks many investors had been hoping for a signal that policymakers would allow no more failures. As it was, Mr Paulson stood by his decision to allow Lehman Brothers to collapse, saying: "Looking back we took the right moves – there was no buyer for Lehman."
The Lehman collapse triggered a chain reaction which helped contribute to the turmoil of recent weeks. Among the victims was insurer American International Group. The Federal Reserve last night arranged a further $37.8bn injection of cash into AIG, which has been effectively nationalised after coming close to failure.
