Hank Paulson: Aggresive Leader

Paulson’s TARP As the economic system began to wobble in 2007, Hank Paulson, the then US Treasury Secretary, was able to foresee what the future had in store for us. How was he able to sense that the economy was in danger? Who knows, but looking back, it appears as if his life experience combined with his personal traits allowed him to not only predict the economic failure but also have the vision to lead the way. The economic recession that hit the US in 2008, left a lot of Americans with a bad taste in their mouths, including me. The way the government handled the situation was not overwhelmingly popular. Nevertheless, after doing quite a bit of reading, when one looks at the facts of how it all transpired, it appears like the facts
might help to see how the story evolved. Mr. Paulson had a lot to do with how the government bailout ended up unfolding, but one key element that he pushed through was the Troubled Asset Relief Program. The TARP came about as an extreme solution that some of Mr. Paulson’s assistances had come up with if the situation ever arose. And it did, after Lehman Brothers filed for Bankruptcy in September 2008. When the whole market crashed that was when Paulson realized this was an extreme situation.
He quickly began working on a solution and put together the first TARP. Unfortunately, as an aggresive leader, he didn’t put the time to come up with something that was well organized, and with multiple layers of control. He just put something together as fast as he could so he would be able to deal with the growing problem as best as possible. As a result, he wrote his whole plan on three pages that gave him the control he needed to deploy a fierce attack against the enemy. But as soon as he submitted it, he realized that he had made a mistake. To everyone else, he just looked like a government official who wanted to have access to large quantities of money without having to deal with all the bureaucracy that came with it. So, his initial ‘draft’ of three pages, was revised and amended into a much larger TARP. In addition, just because he could see the storm coming, it didn’t mean that everyone else could. So when he tried to persuade congress into approving his proposition, he shared his story about what the future would look like if the government did not take action. At first, it seemed like he had done a good job, but the amount of money he was asking at the time made things complicated. Nevertheless, when the TARP got rejected by congress and the market took a nose dive, his ability to paint a vivid picture of the future if the government didn’t act, all of the sudden became brighter. And that facilitated the passing of the Emergency Economic Stabilization Act, which included the
TARP. The main controversy over TARP was the fact that it was aimed at rescuing the economy. But at first glance, it ended up rescuing the big banks instead, and did not do much for the American people, who felt betrayed. However, when we look closer, the bailout saved 1.2 million to 2.6 million jobs in 2009 alone (Milbank). Yes, the banks were the immediate beneficiaries from the bailout, but if the economy had not being stabilized, the American people could have felt a much stronger impact. In addition, when we look at how the TARP has done from a business point of view. As of January, the Treasury has recouped nearly $433 billion – A $10.8 billion more than the $422.2 billion disbursed (Witkowski). So, when we look at the numbers, the unpopular, disliked, TARP did not only put the brakes on the economic crises, but as of today, it has also been profitable. Over all, Hank Paulson was able to foresee the economic trouble in the horizon, and was able to persuade congress into utilizing a strategy that, although unpopular, has been successful so far. Had it been successful without the Fed applying its quantitative easing? That is hard to say, but that is a whole different topic. Works Cited

Milkbank, Dana. "UMKC University Libraries Proxy Server Login." UMKC University Libraries Proxy Server Login. Spokesman Review, 19 Dec. 2013. Web. 12 Feb. 2014. Witkowski, Rachel. "UMKC University Libraries Proxy Server Login." UMKC University Libraries Proxy Server Login. American Banker, 22 Jan. 2014. Web. 13 Feb. 2014.