Shadowtraders

Full story here from Vanity Fair. Personally, I felt it was too much of a softball piece, but here is data straight from the horse’s mouth, so to speak. The lengthy text is sectioned with these headers in bold:

Reluctant Nominee
“If I Could Have Had a do-over…”
“Foam on the Runway”
A “Bazooka in My Pocket”
“I Think There Will Be Big Changes”

“Paulson knew that the Obama administration was bound to face continuing criticism as it dispensed the second $350 billion in funds from the tarp program. He said he thought it was all too possible that the system would need more than that. This was in January, and Paulson knew his words would not become public for many months. “I’d never say it publicly right now,” he told me. “In my judgment, $350 billion is not enough.”

I asked Paulson what sort of new paradigm might emerge in the financial system. “There’s always a tendency to over-react—or to take what’s happening at any one point in time and then look at a trend and get an extreme result that doesn’t happen. I can think of times over the last 10 years when it was all the mega-banks that were going to inherit the world. Then it was, you know, private equity and hedge funds. So I think there will be big changes, but I think the changes we’re going to see are going to have to do much more with the shape of the regulatory system, the regulatory powers that are acquired, the financial architecture globally and domestically.”

Henry Paulson arrived in Washington hoping to find the sliver of daylight that might help his party redeem itself, and to help a president who he hoped might yet do good things. He came to believe that in the face of turmoil the biggest mistake that economic policymakers could make was to do too little. Some of his furious fellow Republicans came to believe he did too much—as do some furious critics on the left, though for different reasons. Paulson himself is relieved just to have gotten us through the night.”