$100B Bank Fund Shows Paulson's Touch

Treasury sec works behind scenes to shore up mortgage market
By Jason Farago,  Newser Staff
Posted Oct 16, 2007 7:29 AM CDT
$100B Bank Fund Shows Paulson's Touch
Treasury Secretary Henry Paulson answers questions at a news conference at the Treasury Department in Washington, Wednesday, Oct. 10, 2007, to announce the formation of "HOPE NOW", an alliance of credit and homeowners' counselors and mortgage borrowers and lenders to help homeowners who may not be able...   (Associated Press)

This weekend's bank deal to establish a $100-billion "superconduit" fund to buy back  shaky mortgage securities showed the hand—and the strategy—of Hank Paulson, the New York Times reports. Though the treasury secretary has said for months he's confident  investors can handle the mortgage credit crisis themselves, he has also pushed harder than expected to help them invent new strategies to do so.

Paulson dispatched two top deputies  who made their names on Wall Street to gather rival bankers together and hash out a plan to restore confidence in the mortgage market. The deal reflects Paulson's goal—to stabilize markets without a bailout that might invite further risky investment—and his style, which is to deploy pressure and moral persuasion behind the scenes, the Times notes. (More Henry Paulson stories.)

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