It’s becoming harder and harder to believe that anyone is really in charge of the world’s largest economy. Each day brings a new catalogue of woes, miscues and missteps, each of which should have been foreseen long ago. And at the centre of each fresh foul-up stands one man: Treasury secretary Hank Paulson, ‘Hammerin’ Hank’, once boss of mighty Goldman Sachs, now reduced to a sort of Frank Spencer figure, constantly bemused by domestic disaster. Only in Hank’s world it’s the American mortgage industry that’s falling apart, not just the kitchen table.
The latest stress test for America’s embattled economy is the sudden, alarming decline in the shares of Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Association), institutions that together guarantee and fund $6 trillion worth of mortgage debt. Traditionally, both fall under the purview of the Treasury, yet Paulson has been notably slow to respond.
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