Why Did Ben Bernanke Call Hank Paulson 85 Times During Early Stage of Subprime Crisis?


Tomorrow (Wednesday) at 2:30 pm, Treasury Secretary Hank Paulson will be speaking to the Real Estate Roundtable’s State of the Industry Meeting. According to a press release, he will discuss the state of the U.S. economy and the fiscal growth package.

I highly recommend that people watch the first five minutes (and more if you can handle the sound problems — as the entire panel was stunningly good) of the New America Foundation event video above. During his comments, economist David Hale said that during the early stages of the subprime loan crisis, Fed Chairman Ben Bernanke called Hank Paulson 85 times (at 4:05 in the video). Hale said that Bernanke was calling to understand the crisis unfolding because Paulson had helped create the crisis.
Hale’s other commentary about the Fed being late to action, not seeing this coming, of sending mixed signals about whether it would raise or lower rates — is also fascinating to be reminded of. This event took place on November 30, 2007 — and the fact that Hale, James K. Galbraith, and Zachary Karabell got so much right then in their criticism of the Fed and the Bush administration’s policies deserves note.
BUT TOMORROW, someone at the event really should ask Paulson what some of the bullet points were that he shared with Bernanke in those 85 phone calls.
— Steve Clemons


5 comments on “Why Did Ben Bernanke Call Hank Paulson 85 Times During Early Stage of Subprime Crisis?

  1. FHA GURU says:

    I do think expanding the fha loan limits across the board could help the housing slump.


  2. Carroll says:

    Here’s the gist of what passed the house.
    Next to the senate….where the house and senate piggies will have have a fight over what party favors they want to cchange or trade and then in a spirit of bipartisanship split the loot and call it a day and announce they have “saved the economy.”


  3. Carroll says:

    If my hearing didn’t deceive me I just hear a congressman in the rebate scheme debate thank congress for including the US “territories” in the rebate….then he made reference specifically to the inclusion of the Marianas Islands..I didn’t catch exactly how they were being included in the “stimulus package.
    I may be wrong but I think in most of our territories people there aren’t considered US citizens but US nationals…as far as I can find they pay taxes to their own “republic” or local gov entity not to the US.
    The Mariana Islands were where the Jack Abramcoff and Ney and a few other scandals were situated and about forced labor industry…
    “In the extreme, the island’s exemption from U.S. labor laws has led to many alleged exploitations including recent claims of sweatshops, child labor, child prostitution and even forced abortions. [12] Ms. magazine took on the issue in depth in their Spring 2006 article “Paradise Lost: Greed, Sex Slavery, Forced Abortions and Right-Wing Moralists.”
    A separate immigration system outside of federal U.S. control has resulted in a large number of Chinese migrant workers (about 15,000 during the peak years) employed in the Islands’ garment trade. However, the lifting of World Trade Organization restrictions on Chinese imports to the US has put the Commonwealth-based trade under severe pressure, leading to a number of recent factory closures. Adding to the U.S.-imposed scheduled wage increases, the garment industry is expected to become extinct by 2009. [13]
    Exemptions from some federal regulations
    Although the CNMI is part of the United States, several Republican Party members of Congress have fought hard to keep labor regulation out of the CNMI. In 1998, Republican Congressman Tom Delay called the CNMI a “perfect Petri dish of capitalism.” Two years later, in addressing the Governor of the Islands, Delay said:
    “You are a shining light for what is happening in the Republican Party, and you represent everything that is good about what we’re trying to do in America in leading the world in the free-market system.”
    However, the lack of labor regulation is not without controversy.
    Some extreme labor practices, not common elsewhere in the United States, have occurred. Some of these labor practices include forcing workers to have abortions, as exposed in the March 18, 1998, episode of ABC News’ 20/20, and enslaving women and forcing them into prostitution, as in the U.S. Department of Justice conviction of several CNMI traffickers in 1999 attests. In 2005 and 2006, the issue of these regulatory exemptions in the CNMI was brought up during the American political scandals of Congressman Tom DeLay and lobbyist Jack Abramoff.
    Goods manufactured in insular areas of the United States can be labeled “Made in USA.”
    So..er… is this some kind of pork payoff in the rebate bill or what?
    Better burn congress to the ground before they think up any more rebates, tax schemes and pork to stuff into “saving the economy.”


  4. Carroll says:

    I am not a Fed expert or an economist but when monetary polices are set to benefit a certain segment or are constantly minipulated to cope with and sustain the financial imbalances that favor a certain segment sooner or later it become impossible to continue. It’s like the cannibals eating all their neighbors and then wondering where they all went.


  5. ... says:

    the federal reserve is a private bank.. they don’t care about the folks on main street.. they weren’t able to prevent the 30’s from happening and they won’t be able to prevent what is going to happen down the road here.. regardless who the chairman of the fed is, just think of the guy behind the curtain in the wizard of oz and you have the picture right…


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