FINANCIAL TIMES: …Mr Paulson, who was chief executive of Goldman Sachs before joining the Treasury under President George W Bush in 2006, said he approved of the sharp increase in US capital requirements enforced by the Federal Reserve. “I’m very unsympathetic to those who think the capital requirements are too high for the large institutions,” he told the Financial Times, adding that he liked the capital surcharge imposed on the biggest banks, including Goldman and JPMorgan, which has been resisted by the industry. He said he was “much more concerned” with the repo market, which investment banks use to fund their operations…
In other areas of US policy, Mr Paulson expressed frustration. He said his move to seize Fannie Mae and Freddie Mac, the mortgage finance companies, and place them in government conservatorship had proved to be right. “I think it could have been a disaster,” he said, if the companies, which guarantee US home loans, had been allowed to fail, and house prices could have suffered a more severe fall.
But he expressed dismay that the temporary fix had been allowed to fester, with Fannie and Freddie still under government control and 90 per cent of the housing market now backed by them and other official entities… (more)
