Evan Newmark has a column in the WSJ making the case that we should start honoring Hank Paulson as a “national hero.” Newmark lists the various improvements in credit markets since Paulson got Congress to approve his Troubled Asset Relief Program last fall, then writes:
All of this is not to suggest that TARP alone made all these good things happen. Certainly, Ben Bernanke’s Fed has been pretty forgiving with its monetary policy.
Nor is it to suggest that Hank Paulson knew exactly what he was doing in the frenzied days of last fall. He didn’t. The TARP as originally conceived was to buy up toxic assets off the bank balance sheets. To this day, those assets are still sitting there.
But TARP was the beginning of the end of the crisis. And it was Paulson’s baby.
I think Newmark is mostly right about this. There’s a lot one can berate Paulson for: Letting Lehman go, bailing out AIG in such sloppy fashion, lobbying the SEC—back when he was CEO of Goldman Sachs—to allow investment banks to take on more leverage. But when the financial world was on the brink of collapse last fall, he did whatever he could to keep it from actually collapsing. And he succeeded.
Which brings to mind a moment from that Bloomberg/Vanity Fair panel discussion on the crisis last week that I attended and has since been transcribed and is making its way around the blogosphere. Austan Goolsbee was talking about how a Depression had been averted, and Andrew Sorkin said (according to the somewhat muddled transcript),
SORKIN: By the way, are we going to give Obama credit for that or are we going to give Bush credit for that?
GOOLSBEE: You’re going to give Bush credit for what?
SORKIN: Stopping the Great Depression, or no?
GOOLSBEE: No. I wouldn’t do that as a “no.” [I think he really said "I would do that as a 'no'"]
SORKIN: You’d be better than “no.” OK. So Paulson didn’t do anything.
GOOLSBEE: I didn’t say he didn’t do anything. Many of the things he did I wish he hadn’t done.
When pressed to list some of these things (this doesn’t show up in the transcript, but I remember it) Goolsbee had nothing to say. I thought this was his weakest moment in the whole discussion. The Obama administration has not significantly strayed from the course set by Paulson. It has elaborated upon it, and in some cases improved upon it. But if we are going to celebrate the fact that the world hasn’t ended, Hank Paulson has to get some of the credit for that.