Bloomberg did an extensive profile on Treasury Secretary Henry Paulson today, which covers a lot of biographical and also serves as a good timeline of the credit crunch. Former Goldman Sachs CEO Paulson was brought in to run the Treasury after the Bush administration struggled with its first two men in the post: Paul O’Neill was ousted for being a critic of the president and his core team and then brought in lap dog John Snow.
Paulson has been the right man for the job, and perhaps most unfortunate is that he will be done in January when the Bush administration finishes it’s second term. This will come at a critical time when it’s very likely that a nationalization then privatization plan for Fannie Mae and Freddie Mac may be in process. Paulson was the architect of getting Treasury the power to do this, yet he might not implement it. The Bloomberg piece claims he will focus on environmental issues. But today on CNBC, former FDIC and Resolution Trust Corporation chairman Bill Seidman suggested that Paulson should be the man to run the nationalized version of Fannie and Freddie so he can properly transition them back to the private sector.
A nationalized Fannie/Freddie would take on a similar model as the Resolution Trust Corporation which was created to liquidate real estate and financial assets it inherited from insolvent S&Ls during the last housing and mortgage crisis. We agree with Seidman that Paulson is certainly well suited for the roll.