PAULSON’S RECORD….Ezra Klein has an eminently fair and nonshrill critique here of Henry Paulson’s handling of the ongoing credit crisis. I’ll just add one thing. Paulson’s reluctance to push the trigger on capital infusions for banks is understandable, even if it was wrong, but his resistance to having even the power to recapitalize banks is genuinely weird. After all, before the latest phase of the crisis hit, Paulson and Bernanke had spent months urging banks to raise private capital to weather the storm. Both men knew perfectly well that bank capitalization was an issue. And before he introduced his version of the bailout bill, Paulson had twice previously bowed to reality on government takeovers and recapitalizations, first in the case of Fannie and Freddie, and second in the case of AIG.
Given all this, his continuing resistance to the idea is difficult to fathom. His caution can perhaps be written off to background and ideology, but not his flat rejection of even being given the authority. I’m not sure what the explanation is.
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