Thursday, September 11, 2008

Paulson: Hopeful Stabilty In Housing Market By End Of The Year

Business Week just posted a Maria Bartiromo interview with Treasury Secretary Paulson. Here are key excerpts, including Paulson hinting at subtle pressure from China:

BARTIROMO: One fund manager said to me: "Look, the Chinese government, which owns billions in Fannie and Freddie paper, basically said to Paulson, 'We're not buying any more unless it is explicit that you are guaranteeing this.'"

PAULSON: That's not true. There was growing concern and questions about what Treasury was going to do, and we were reassuring investors. But I received no threats or anything as direct as you're suggesting.

BARTIROMO: Most Americans just want to know when we will see this dramatic move stop the slide in home prices.

PAULSON: I'm hopeful we would have more stability in home prices by the end of the year, but I'm not prepared to project it.
Note: Stability won't occur for a long time unless the Fed reverses its current tight money policy. M2 money supply is growing at only a 1.8% annualized rate.


BARTIROMO:One day after the market reacted positively to the Fannie and Freddie takeover, fears of Lehman's inability to raise capital led the S&P 500 to its biggest drop since February '07. Are there plans afoot for a takeover of Lehman?

PAULSON:I can't comment on any specific company in the news today. I've got to hop, and I thank you very much.

-Robert Wenzel

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