Treasury's Paulson Urges Bipartisan Effort to Restore Market Stability

Treasury Secretary Henry Paulson said on Thursday the Treasury's priority is restoring stability and repairing capital markets, but that market recovery will take some time. He urged further efforts to find solutions that aren't reckless.

"Clearly with the market stresses continuing, maintaining stability throughout the recovery process continues to be our first priority and recovery will take some time. There is, quite rightfully, focus on reforming the system that enabled the excesses," he said at the Reagan Library in Simi Valley, California.

Urging a bipartisan effort to find solutions, Paulson said regulators have the tools to maintain stability through the right reforms.

"My regulatory reform views are based on the principles of transparency and accountability, and my belief that our entrepreneurial nation must continue to foster prudent risk-taking, while not rewarding failure or encouraging recklessness," he said.

Paulson called the events of the last year "humbling," adding that better regulation is in order, but noted calls for more regulation in and of itself are not helpful. "If we do not correctly diagnose the causes, and instead act in haste to implement more rather than better regulations, we can do long term harm," he said.

Speaking about the government-sponsored enterprises that the government took over, Paulson called the conservatorship of Fannie Mae and Freddie Mac "temporary", adding that their future will be in the hands of the Obama Administration.

Reacting to criticism that the government decision to let Lehman Brothers fall was the cause of the latest phase in the 14-month credit crunch, Paulson called that notion "naïve."

By Patrick McGee and edited by Stephen Huebl
©CEP News Ltd. 2008