Henry Paulson vs. Congress

With the financial system in a “tentative” state of recovery, said The Washington Post in an editorial, you’d think Congress might want to study what former Treasury Secretary Henry Paulson did right last winter. Nope. A House committee hauled him in to rehash his role in forcing the taxpayer-subsidized shotgun marriage of Bank of America and Merrill Lynch. Looks like “resentment of bailing out Wall Street is a bipartisan affair.”

Well, Paulson “spoiled all the finger-pointing fun,” said Brian Wingfield in Forbes. The House is treating the forced merger as a “who-done-it,” but Paulson admitted right off that he was solely responsible for the “arm twisting” of BofA CEO Ken Lewis—and that threatening to fire Lewis was “appropriate,” given the dire alternatives.

Good to see that Paulson is “still the greatest Chicken Little our country has yet produced,” said Tim Cavanaugh in Reason, even if he is “absolutely sincere in his panic.” The best part of the hearing was Paulson’s explanation for why we needed to rush headlong into throwing $700 billion at banks; the “Bank of America conspiracy theory” was a “distraction.”

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Maybe, but it was the focus of the House’s inquisition, said David Weidner in MarketWatch. And now that Paulson, Lewis, and Fed Chairman Ben Bernanke have all testified, “who won?” That depends on where you’re sitting. Paulson wins tough-guy points, Lewis and his bank survived, and Bernanke stabilized the banking system. Maybe they all won.