Question

In what way did henry paulson have to overcome his own ideology throughout the whole process?

Answer 1

Henry Paulson (born in 1936) was a directive of the investment bank Goldman Sachs, before becoming the 74th Secretary of the Treasury of the US in 2006. Hence, he was in office in the years prior and during the financial crisis, and had to make critical decisions during those times. As many others, he overrelied on the strenght of the American economy and was soon overwhelmed by the situation.

During the second and third quarters of 2007, he claimed in front of the press that the American economy was robust enough and that subprime mortgage crisis had been properly contained. Therefore, the 'laissez-faire' or lack of intervention, was the firstly addopted attitude.

In 2008 he had to initatiate a governemental intervention in the economy with no precedents, to prevent the very close collapse of the banking system and the severely destructive effects that we already affecting the real economy. He implemented the TARP, to purchase up to 700$ billion of troubled assets, and performed the AIG bailout. He also injected in the economy a billionaire stimulus package as part of a QE (Quantitative Easing) program to fight the toughest crisis since 1929.