While the financial reform bill was a "significant step" toward modernizing the nation's regulatory structure, former Treasury Secretary Hank Paulson views it as only as the first of many reforms necessary. In a Washington Post op-ed he outlines the many additional steps, most of which pertain to "dramatically scaling back Fannie Mae and Freddie Mac."
The proverbial ink hadn’t even dried on the Post’s op-ed page before one of Paulson's most outspoken critics, Barry Ritholtz, lashed out at the ideas: "[He] ignores facts, rewrites history, and fabricates causes of the economic collapse." Ritholtz then documented the many reasons why the former treasury secretary is completely wrongheaded:
On how government policies promoting homeownership didn’t spark the crisis:
Perhaps the former US Treasury Secretary can explain how the world had a global housing boom and bust — countries not covered by the FHA [Federal Housing Administration]or GSEs. How did THAT happen? Indeed, the boom and bust in the US was smaller than that of many other nations. And the FHA/GSE role in that? Perhaps the former Treasury Secretary can explain the root causes of that.
On the rewrite of history:
Paulson oversaw the greatest transfer of wealth in the history of mankind — from taxpayers to insolvent banks and their bondholders. His commentary is thinly veiled attempt to rewrite what actually occurred, and to shift his own sad role from conductor of the theft, to hapless victim of long standing government policy.
And a parting shot:
Paulson’s book on the crisis is "On the Brink." It should be titled "Too Much to Drink."