Wednesday, September 24, 2008

McCain suspends campaign to work on Wall Street plan

Wed Sep 24, 2008 3:59pm EDT


By Steve Holland

NEW YORK (Reuters) - Republican presidential candidate John McCain said on Wednesday he will break off from campaigning to help on a Wall Street rescue plan and asked that a Friday debate with Democrat Barack Obama be postponed.

McCain, in a statement to reporters, said he would suspend his campaign on Thursday to return to Washington.

He added he did not believe the Bush administration's proposed legislation on a $700 billion bailout plan for the financial industry would pass the U.S. Congress in its current form.

McCain, an Arizona senator, called on Obama to join him in working together on a plan and said he had spoken to the Democrat about doing so. He said a consensus agreement on a bailout plan is needed by the time the financial markets open on Monday.

Obama, an Illinois senator, planned to make a statement on the issue shortly.

"It's time for both parties to come together to solve this problem," McCain said. "We must meet as Americans, not as Democrats or Republicans, and we must meet until this crisis is resolved."

The Bush administration is pushing the plan hard in Congress. The White House welcomed McCain's announcement.

Dana Perino said, "We are making progress in negotiations on the financial markets rescue legislation, but we have not finished it yet."

McCain's dramatic move, aimed at projecting leadership during the greatest U.S. financial crisis since the Great Depression, came at a time when Americans have been telling pollsters they believed Obama could handle the economy better than McCain.

Obama spokesman Bill Burton said Obama had called McCain on Wednesday morning to ask if he would join him in issuing a joint statement aimed at taking a bipartisan approach to the endangered $700 billion bailout.

The aim, said Burton, would be to act in a bipartisan manner to pass a proposal.

"At 2:30 this afternoon, Senator McCain returned Senator Obama's call and agreed to join him in issuing such a statement. The two campaigns are currently working together on the details," Burton said.

McCain urged President George W. Bush to call for a bipartisan meeting of congressional leaders, including him and Obama, to try to find an agreement.

The debate scheduled on Friday in Oxford, Mississippi, is supposed to be the first of three face-to-face sessions between McCain and Obama, who face off in the presidential election on November 4.

"I am directing my campaign to work with the Obama campaign and the Commission on Presidential Debates to delay Friday night's debate until we have taken action to address this crisis," McCain said.

McCain said it was essential to pass legislation to deal with what he called a "historic crisis."

"If we do not, credit will dry up, with devastating consequences for our economy. People will no longer be able to buy homes and their life savings will be at stake," he said.

McCain senior adviser Mark Salter said the campaign suspension would include pulling McCain's television ads. (Additional reporting by Deborah Charles, Editing by Frances Kerry)


Source: http://www.reuters.com/article/newsOne/idUSTRE48N7ZP20080924?sp=true

Street Wobbles On Goldman Bet

Markets Brief

Steve Schaefer, 09.24.08, 12:20 PM ET

Goldman Sachs
Tear Sheet Chart News



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It was a case of déjà vu on Wall Street--stocks paused with Congress conducting hearings on the planned rescue package for the financial sector.

Minimal early gains were eroding, with the Dow down 27 points, or 0.3%, to 10,827. The S&P 500 was off 2 points, or 0.2%, to 1,186; while the Nasdaq held onto a slim advance, up 7 points, or 0.3%, to 2,161. A vote of confidence for Goldman Sachs (nyse: GS - news - people ) gave financial stocks a modest lift, after billionaire Warren Buffett made an aggressive bet on the firm.

Buffett'sBerkshire Hathaway (nyse: BRK - news - people ) is investing $5.0 billion in Goldman, which has sailed through the credit crunch relatively unscathed, but proved unable to avoid the lack of confidence that took down rivals Bear Stearns, Lehman Brothers Holdings (nyse: LEH - news - people ) and Merrill Lynch (nyse: MER - news - people ). Monday, Goldman and Morgan Stanley (nyse: MS - news - people ), the last two independent securities firms left on the Street, sought and won Federal Reserve approval to morph into commercial banks in a move to gain easier access to funding.

Just days later, the Buffett investment fares well for Goldman's future, even if it comes at a steep cost: perpetual preferred shares with a 10.0% dividend and warrants to purchase a batch of common shares priced at $115.00. The deal gives Buffett an immediate profit -- 11.9% early Wednesday with Goldman up $3.66, or 2.9%, to $128.71 -- and stands to become even more lucrative if Goldman can return to its pre-crisis salad days when its shares peaked above $235.00. (See "Buffett's Golden Goldman Buy.")

Goldman's gains showed that investors take solace in one of the nation's most-respected businessmen throwing his support behind the Street. The firm is also planning to sell an additional $2.5 billion of common stock, but the prospect of further dilution hardly rattled existing shareholders. (See "Goldman Doubles Down.")

Meanwhile, even as Buffett was making his bet on Goldman, Fed chief Ben Bernanke and Treasury Secretary Henry Paulson were set for another round of hearings to defend their $700.0 billion rescue package to prop up the U.S. financial system. Bond traders rushed back into the perceived safety of government debt, despite expectations a hefty debt issuance will be part of any bailout plan.

Treasury yields faltered, with the steepest drops coming in shorter maturities. The three-month T-bill was yielding 0.51%, down from 0.86% Tuesday. The 10-year note yield slipped to 3.77%, from 3.84%, while the two-year yield fell to 2.03%, from 2.11%.

A steeper-than-expected drop in August existing home sales did little to faze investors, after the National Association of Realtors recorded 4.91 million sales for the month, down from 5.02 million in July. The July figures included a notable percentage of distressed homes purchased out of foreclosure. The August data also had one encouraging sign, as the report showed a 10.4 month supply of inventory, down from a revised 10.9 months in July.

Buffett Gives Europe Support

Financial Fallout Hits Silicon Valley

Source: http://www.forbes.com/markets/2008/09/24/briefing-midday-goldman-markets-equity-cx_ss_0924markets22.html

Russian Navy Deploys Ships to Venezuela

September 24, 2008 10:49 pm by pna

By Ilya Kramnik

MOSCOW, Sept. 24 — A Russian Navy squadron set off for Venezuela Monday in a deployment of Russian military power to the Western Hemisphere unprecedented since the Cold War.

During the Cold War, Latin America became an ideological battleground between the Soviet Union and the United States.

The Kremlin has recently moved to intensify contacts with Venezuela, Cuba and other Latin American nations amid strained relations with Washington after last month's conflict between Russia and Georgia.

The squadron comprising the Russian Northern Fleet's Pyotr Veliky (Peter the Great) battle cruiser and the anti-submarine warfare (ASW) ship Admiral Chabanenko will participate in exercises off the Venezuelan coast.

In the past, the world's major powers would demonstrate their naval capabilities in various regions, hinting ominously that they could disrupt enemy lines of communication in case of conflict.

Gunboats and other small warships, rather than capital warships, were an effective instrument for accomplishing such objectives.

However, the Pyotr Veliky and the Admiral Chabanenko are the Russian Navy's newest capital ships. Moscow's decision to send them to Venezuela implies that both warships can show their flags and defend them.

Military analysts often stress that the Russian Navy is vastly outnumbered by the U.S. Navy and those of NATO countries, and that Russian warships would be unable to score any impressive results.

Although the U.S. Navy is a powerful fighting force, it cannot be strong everywhere. The arrival of two capital Russian warships in the Caribbean Sea, traditionally a U.S. sphere of influence, will be a nasty surprise to Washington, compelling it to devote more attention to regional defenses.

The Pyotr Veliky displaces 25,000 metric tons and carries 20 P-700 Granit (SS-N-19 Shipwreck) supersonic anti-ship cruise missiles that can destroy ships of any class. The Russian battle cruiser is also heavily armed for ASW and air-defense missions; such weaponry also enhances its combat survivability.

The Admiral Chabanenko, which carries eight P-270 Moskit (SS-N-22 Sunburn) anti-ship missiles and surface-to-air missile (SAM) systems, is intended to locate and destroy enemy submarines.

Both warships can support each other and have the capability to inflict major losses on any adversary before they are outgunned.

The Russian squadron's objectives, rather than its capabilities, are a high-priority issue. The Kremlin has recently used the Navy during the peace enforcement operation in Georgia and now wants to display its naval might at America's doorstep.

Nevertheless, the Russian Navy's state will not improve as a result of Moscow's modified policies. Hopefully, the government will soon start restoring and rearming the Navy because any show of strength will otherwise prove ineffective. (PNA/RIA Novosti)

DCT/rsm

Source: http://news.balita.ph/2008/09/24/russian-navy-deploys-ships-to-venezuela/

P.S. Video: Russian warships head across Atlantic RussiaToday

Just who is Henry "Hank" Paulson?

From Wikipedia, the free encyclopedia

(Redirected from Hank Paulson)

Henry M. Paulson
Henry Paulson

Incumbent
Assumed office
July 3, 2006
PresidentGeorge W. Bush
Preceded byJohn W. Snow
BornMarch 28, 1946 (1946-03-28) (age 62)
Palm Beach, Florida
Political partyRepublican
Alma materDartmouth College, Harvard University
ProfessionInvestment banker
ReligionChristian Science

Henry Merritt "Hank" Paulson Jr. (born March 28, 1946) is the United States Treasury Secretary and member of the International Monetary Fund Board of Governors. He previously served as the Chairman and Chief Executive Officer of Goldman Sachs.

Contents

Early life and family

Born in Palm Beach, Florida, to Marianna Gallaeur and Henry Merritt Paulson, a wholesale jeweler,[1] he was raised in Barrington Hills, Illinois. He was raised as a Christian Scientist.[2] Paulson attained the rank of Eagle Scout in the Boy Scouts of America.[3][4] Paulson received his Bachelor of Arts in English from Dartmouth College in 1968;[5] at Dartmouth he was a member of Phi Beta Kappa and was an All Ivy, All East, and honorable mention All American as an offensive lineman.

He met his wife Wendy during his senior year. The couple has two adult children, Henry Merritt III and Amanda Clark, and became grandparents in June 2007. They maintain homes in Washington, DC and Barrington Hills, Illinois.

In 1970 Paulson received a Master of Business Administration degree from Harvard Business School.[6]

Career highlights

Paulson was Staff Assistant to the Assistant Secretary of Defense at The Pentagon from 1970 to 1972.[7] He then worked for the administration of U.S. President Richard Nixon, serving as assistant to John Ehrlichman from 1972 to 1973.

He joined Goldman Sachs in 1974, working in the firm's Chicago office. He became a partner in 1982. From 1983 until 1988, Paulson led the Investment Banking group for the Midwest Region, and became managing partner of the Chicago office in 1988. From 1990 to November 1994, he was co-head of Investment Banking, then, Chief Operating Officer from December 1994 to June 1998;[8] eventually succeeding Jon Corzine (now Governor of New Jersey) as its chief executive. His compensation package, according to reports, was US$37 million in 2005, and US$16.4 million projected for 2006.[9] His net worth has been estimated at over US$700 million.[9] Paulson has personally built close relations with China during his career. In July 2008 it was reported by The Daily Telegraph that: "Treasury Secretary Hank Paulson has intimate relations with the Chinese elite, dating from his days at Goldman Sachs when he visited the country more than 70 times."[10]

Civic activities

Paulson has been described as an avid nature lover.[11] He has been a member of The Nature Conservancy for decades and was the organization's board chairman and co-chair of its Asia-Pacific Council.[7] In that capacity, Paulson worked with former President of the People's Republic of China Jiang Zemin to preserve the Tiger Leaping Gorge in Yunnan province.

Paulson is also on the Board of Directors of the Peregrine Fund; was the founding Chairman of the Advisory Board of the School of Economics and Management of Tsinghua University in Beijing; and, previously served as chairman of the influential trade group, the Financial Services Forum.

Notable among the members of Bush's cabinet, Paulson has said he is a strong believer in the effect of human activity on global warming and advocates immediate action to decrease this effect.[12]

As an environmental leader and philanthropist, Paulson while at Goldman Sachs, oversaw the corporate donation of 680,000 forested acres on the Chilean side of Tierra del Fuego, which led to criticisms from Goldman shareholder groups [13]. He further donated US$100 million of assets from his wealth to conservancy causes. He pledged his entire fortune for the same purpose at death. [14] He has also been considered someone who can influence world and business leaders to think beyond the bottom line. [15]

Treasury Secretary nomination

Paulson (right) with President George W. Bush as his nomination to become Treasury Secretary is announced.
Paulson (right) with President George W. Bush as his nomination to become Treasury Secretary is announced.

Paulson was nominated by U.S. President George W. Bush to succeed John Snow as the Treasury Secretary on May 30, 2006.[16] On June 28, 2006, he was confirmed by the United States Senate to serve in the position.[17] Paulson was officially sworn in at a ceremony held at the Treasury Department on the morning of July 10, 2006.

Paulson's three immediate predecessors as CEO of Goldman SachsJon Corzine, Stephen Friedman, and Robert Rubin — each left the company to serve in government: Corzine as a U.S. Senator (later Governor of New Jersey), Friedman as chairman of the National Economic Council (later chairman of the President's Foreign Intelligence Advisory Board), and Rubin as both chairman of the NEC and later Treasury Secretary under President Bill Clinton.[18]

Acts as Treasury Secretary

Paulson has quickly distinguished himself from his two predecessors in the Bush administration by formally identifying the wide gap between the richest and poorest Americans as an issue on his list of the country's four major long-term economic issues to be addressed, highlighting the issue in one of his first public appearances as Secretary of Treasury.[19]

Paulson has conceded that chances were slim for agreeing on a method to reform Social Security financing, but said he would keep trying to find bipartisan support for it. [20]

He also helped to create the Hope Now Alliance to help struggling homeowners during the subprime mortgage financial crisis.[21]

Views Expressed by Paulson as Secretary of the Treasury

In August 2007, Secretary Paulson explained that U.S. subprime mortgage fallout remained largely contained due to the strongest global economy in decades. [22]

On July 20, 2008, after the failure of Indymac Bank, Paulson reassured the public by saying, “it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation.” [23]

On August 10, 2008, Secretary Paulson told NBC’s Meet the Press that he had no plans to inject any capital into Fannie Mae or Freddie Mac.[24] On September 7, 2008, both Fannie Mae and Freddie Mac went into conservatorship.[25]

Leader of U.S. government economic bailout efforts of 2008

Paulson was the designated leader of the Bush administration's efforts in 2008 to federalize the cost of bad loans made by unregulated financial institutions.

Through unprecedented intervention by the U.S. Treasury, Paulson led government efforts purported to avoid a severe economic slowdown. He pushed through the conservatorship of government agency mortgage giants Fannie Mae and Freddie Mac. Working with Federal Reserve Chairman Ben Bernanke, he influenced the decision to create a credit facility (bridge loan & warrants) of US$85 billion to American International Group so it would avoid filing bankruptcy.

In late September of 2008, Paulson, along with Bernanke and Christopher Cox, led the effort to help financial firms by agreeing to create out of nothing US$700 billion dollars to purchase bad debt they had incurred.[26] Discussing his decision to take action, Paulson said: “It just happened dramatically. There was only one way that we could reassure the markets and deal with a very significant and broad-based freezing of the credit market. There was no political calculus. It was overwhelmingly obvious.”[27]

On September 19, 2008, Paulson called for the U.S. government to spend hundreds of billions of dollars more to rescue financial firms from nonperforming mortgages that threaten the stability of those firms.[28] Due to his leadership and public appearances on this issue, the press labeled these measures the "Paulson financial rescue plan" or simply the Paulson Plan.[29]

There has been some criticism of Paulson, with suggestions that Paulson's plan may potentially have some conflicts of interest. This since Paulson is the former CEO of Goldman Sachs, a firm that may benefit from the plan. [30][31] Unlike the previous bailouts and managed liquidations of Goldman competitors Bear Stearns, Merrill Lynch and Lehman Bros. and those of AIG, Freddie Mac and Fannie Mae, in which shareholder value was largely wiped out, Goldman's stock would likely rise under the Paulson plan, benefiting his former partners, because it would take distressed assets off of their balance sheet. [32]

The proposed bill would give him unprecedented powers over the economic and financial life of the U.S. Section 8 of Paulson’s plan states: “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”[33]

References

  1. ^ 1
  2. ^ Patricia Sellers, Hank Paulson's secret life, The CEO of Goldman Sachs is passionate about banking. But he's also obsessed with snakes, tarantulas, and coral reefs., Public Broadcasting Service, "Wall Street Week with Fortune" feature, December 29, 2003.
  3. ^ Townley, Alvin [2006-12-26]. Legacy of Honor: The Values and Influence of America's Eagle Scouts. New York: St. Martin's Press, pp. 178-188, 196. ISBN 0-312-36653-1. Retrieved on 2006-12-29.
  4. ^ Ray, Mark (2007). "What It Means to Be an Eagle Scout". Scouting Magazine. Boy Scouts of America. Retrieved on 2007-01-05.
  5. ^ Belser, Alex (31 May 2006). "Paulson '68 to lead Treasury", The Dartmouth.
  6. ^ www.02138mag.com/people/385.htmlM
  7. ^ a b The Nature Conservancy (2006). Henry M. Paulson, Jr..
  8. ^ Goldman Sachs (2006). Goldman Sachs Group, Inc - Management.
  9. ^ a b Forbes (2006). Henry M. Paulson, Jr..
  10. ^ US faces global funding crisis, warns Merrill Lynch - Telegraph
  11. ^ Somerville, Glenn (30 May 2006). "Paulson brings Wall Street luster to Treasury", Yahoo! News.
  12. ^ Heilprin, John (2 June 2006). "A global warming believer in Bush Cabinet", Associated Press.
  13. ^ Treasury Nominee Hank Paulson Needs to Answer Some Questions, Human Events, 2006-06-13
  14. ^ Paulson plans to donate £410m fortune to environmental causes, The Independent, 2004-01-16
  15. ^ Mark Brandon. Environmental Cred for Bush Treasury Nominee, Sustainable Log (Blogspot)
  16. ^ White House (2006). President Bush Nominates Henry Paulson as Treasury Secretary. Retrieved June 29, 2006.
  17. ^ Associated Press (2006). Senate Approves Paulson as Treasury Secretary.
  18. ^ White House (2006).President Commends Senate for Confirming Henry Paulson as Treasury Secretary. Retrieved June 29, 2006.
  19. ^ The Christian Science Monitor August 3, 2006 New Treasury head eyes rising inequality. Retrieved August 3, 2006.
  20. ^ "Paulson: Social Security Reform Hopes Slim". Reuters, February 3, 2007.
  21. ^ Hope Now Alliance (2007-10-10). "HOPE NOW Alliance Created to Help Distressed Homeowners". Press release. Retrieved on 2008-09-24.
  22. ^ Lawder, David (August 1, 2007), "Paulson sees subprime woes contained", The Boston Globe, <http://www.boston.com/business/articles/2007/08/01/paulson_sees_subprime_woes_contained/>
  23. ^ "Treasury Secretary Insists Banks Are Safe", CBS News (2008-07-20). Retrieved on 2008-09-23.
  24. ^ Brinsley, John (August 10, 2008). "Paulson Says No Plans to Add Cash to Fannie, Freddie", Bloomsberg Worldwide. Retrieved on 2008-09-23.
  25. ^ Lockhart, James B., III (2008-09-07). "Statement of FHFA Director James B. Lockhart", Federal Housing Finance Agency. Retrieved on 2008-09-23.
  26. ^ Joelle Tessler, Paulson oversees historic government intervention, Associated Press, 2008-09-19
  27. ^ Baker, Peter (2008-09-20). "A Professor and a Banker Bury Old Dogma on Markets", New York Times.
  28. ^ Sahadi, Jeanne (2008-09-19). "Rescue cost: Hundreds of billions", CNNMoney.com.
  29. ^ ""Paulson plan"", Google News search.
  30. ^ Is it safe to trust a Wall Street veteran with a Wall Street bailout?
  31. ^ A Second Opinion?
  32. ^ Shameless Cronyism
  33. ^ Beck, Rachel (2008-09-23). "Transparency key to bailout success", Associated Press. Retrieved on 2008-09-23.

Further reading

External links


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Business positions
Preceded by
Jon Corzine
Chairman and CEO, Goldman Sachs
June 1998 –
July 3, 2006
Succeeded by
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Political offices
Preceded by
John W. Snow
United States Secretary of the Treasury
Served Under: George W. Bush

July 10, 2006 – present
Succeeded by
Incumbent
Order of precedence
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Condoleezza Rice
Secretary of State
United States Presidential Line of Succession
5th in line
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Secretary of Defense
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http://en.wikipedia.org/wiki/Hank_Paulson