The architect behind the attempt to prop up the economy is US Treasury Secretary Hank Paulson, who faces the greatest financial crisis of our time.
Left open is the question of how to fix Fannie and Freddie and what they will look like down the road. The current plan is to let them grow until 2010, in order to buoy the housing market, and then cut them down to a manageable size. "We've got competing objectives," Paulson concedes. "We've got, first and foremost, stability in the financial markets. Secondly, we need to get through our housing correction as quickly as possible." Yet Fannie and Freddie also need to be managed conservatively enough to reassure creditors that they are well capitalized. "This is all about our financial system and about our economy," says Paulson. "It's orders of magnitude more important than Bear Stearns."This interview with Fortune Magazine (save 77% off the cover) is very illuminating. Time will tell if Paulson will go down as the savior of the US (world?) economy or not, but rest-assured, this man is smart, works hard, and is very dedicated to the task at hand.