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Paulson Braces Public for Tough Times

AP
posted: 78 DAYS 1 HOUR AGO
comments: 34
filed under: Earnings, Investing
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WASHINGTON (July 20) - Treasury Secretary Henry Paulson sought to reassure an anxious public Sunday that the banking system is sound, while also bracing people for more troubled times ahead.
"I think it's going to be months that we're working our way through this period — clearly months," he said.

Americans' Top Financial Woes

Gas pricesPaul Sakuma, AP

A recent Gallup poll asked Americans to name the most important financial problem facing their families today. Here is what they said:

1. Energy costs / gas prices - 29%

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Paulson said the number of troubled banks will increase as they struggle to cope with big losses on bad mortgages. The government this month took over IndyMac after a run led it to become the largest regulated thrift to fail.
"Of course the list is going to grow longer given the stresses we have in the marketplace, given the housing correction. But again, it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation," he said in broadcast interviews.
Paulson used appearances on the Sunday talk shows to tell people that deposits up to $100,000 are fully insured. He said no one has lost a single penny on an insured deposit in the 75 years that the Federal Deposit Insurance Corporation has operated.
"We're going through a challenging time with our economy. This is a tough time. The three big issues we're facing right now are, first, the housing correction which is at the heart of the slowdown; secondly, turmoil of the capital markets; and thirdly, the high oil prices, which are going to prolong the slowdown," he said.
"But remember, our economy has got very strong long-term fundamentals, solid fundamentals. And you know, your policy-makers here, regulators, we're being very vigilant."
Paulson said he hoped Congress soon would approve his plan to help shore up Fannie Mae and Freddie Mac, the government-sponsored mortgage companies
"I'm very optimistic that we're going to get what we need from Congress here, because Congress understands how important these institutions are," Paulson said.
The House plans to vote Wednesday on a housing bill that is expected to include a rescue for Fannie Mae and Freddie Mac. The companies' shares have plummeted because of fears about their financial stability. Fannie Mae and Freddie Mac are private, but they were created by Congress to encourage homeownership by buying mortgages from banks. The two hold or guarantee more than $5 trillion in home loans — almost half of the nation's total.
"Our first priority today is the stability of the capital markets, the stability of the system. And these institutions have investors all around the world ... and those investors need to know that we in the United States of America understand the importance of these institutions to our capital markets and to our economy and to our housing market," he added.
Paulson acknowledged the U.S. is continuing to lose jobs, though he said the $168 billion economic relief plan approved this year has created jobs that would not otherwise exist. The plan included tax rebates for people and tax breaks for businesses.

Who's Cutting Jobs

EBayPaul Sakuma, AP

Online auction site eBay says that it will reduce its work force by 10 percent which will affect about 1,600 jobs. EBay, which has been struggling to attract new users, also announced that it will buy three online companies, including payments business Bill Me Later.

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Democratic leaders, including presidential candidate Barack Obama, are pushing for a second, smaller, economic installment. Paulson said he did not want to speculate about that idea.
"I'm focused on this stimulus package. It's made a difference in the second quarter. It's going to make a difference in the third quarter. We need to watch this very carefully," he said.
"Right now we're going through a tough period. There is no doubt about it. But the stimulus plan is making a difference," he said.
The second-ranking House Republican, Rep. Roy Blunt of Missouri, said he was "open-minded" about a follow-up aid plan. "If they bring things to the table they know the president's not going to do, that has very little to do with stimulating the economy. It's all about a political discussion between now and the election," he said.
Paulson appeared on "Face the Nation" on CBS and "Late Edition" on CNN. Blunt was on CNN.
Copyright 2008 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.
2008-07-20 16:49:35
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JPRacher

11:16 AMJul 21 2008

You Dem's put Obama in are you ready for Socialism like in Nazi Germany?

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CALENM1997

05:44 AMJul 21 2008

MR POULSON IS RIGHT THERE ARE HARD TIMES AHEAD THE DEMOOCRATES ARE STOPPING THE DRILLING FOR OIL IN ALASKA AND THE CONTINAL SHELVES AND IN THE EASTERN AND WESTERN GULF COAST MR CASTRO IS GOING TO BE DRILLING FOR OIL 90 MILES OFF OF THE FLORIDA KEYS THEN WHERE WILL WE DRILL FOR OIL CUBA HAS A 100 MILE LIMITED AIR SPACE WE WON'T BE ABEL TO DRILL FOR OIL THERE THEN WAKE UP YOUSTUPID MORONS IF YOU VOTE A DEMACRATIC PRESIDENT INTO OFFICE THENWHAT WILL WE DO OUR GREAT NATION WILL FALLAPART IF WE CAN'T GET ANY CHEAP OILGOD BLESS THE USA GO BE WITH US ALL

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YaHave2Iaugh

03:37 AMJul 21 2008

McCain Speaks Out Of Both Sides Of His Mouth! IT'S UNBELIEVABLE TO SEE HIM FLIPPIN' AND FLOPPIN'....................http://youtube.com/watch?v=GEtZlR3zp4c

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YaHave2Iaugh

03:26 AMJul 21 2008

McCain Speaks Out Of Both Sides Of His Mouth! IT'S UNBELIEVABLE TO SEE HIM FLIPPIN' AND FLOPPIN'.................http://youtube.com/watch?v=GEtZlR3zp4c

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YaHave2Iaugh

03:25 AMJul 21 2008

McCain seems to lie about everything...http://youtube.com/watch?v=GEtZlR3zp4c

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YaHave2Iaugh

03:23 AMJul 21 2008

McCain's Economic Advisor Call Us Nation Of Whiners. Big deal that Phil Gramm removed himself from the situation after he said it. It still doesn't change the fact that this shows us exactly what the mentality of the McCain campaign truly is and always will be all about! How dare they call us a nation of whiners and try to blame us for how bad things are when the fact is, the economy is horrible due to the severe incompetence of the Republican President. It must be easy for them to sit back and tell us that we are just imagining how bad things are because they have never had to worry about money one single day in their rich little lives!.............http://youtube.com/watch?v=2NVjq2py7BA

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YaHave2Iaugh

03:19 AMJul 21 2008

Republicans have failed the American people. They had 7 years to do what's best for this country and instead they have pretty much destroyed every day living as we once knew it. Most people are suffering so much due to Bush and his cronies. So, Republicans can try to smear Barack Obama, but this time around their fear and smear tactics will not work! 911 happened on Bush's watch, even though he was warned with a memo a month before. Republicans say how strong they are on national security, but it was on their watch we were attacked. God forbid we get attacked again...... Republicans actually have the NERVE to think that's going to help them? They are sadly mistaken. It will only prove that REPUBLICANS ARE THE ONES THAT CAN'T KEEP US SAFE! They can't have it both ways. They can't take credit for us not being attacked and then try to take credit if we are attacked by claiming they are the only ones to keep us safe. IT DOESN'T MAKE SENSE! TIME FOR A NEW START WITH A NEW DEMOCRAT!

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Waseemisawarrior

02:35 AMJul 21 2008

Blame Bush? once and for alll...IT IS NOT BUSH!!!

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Bbronxb

02:32 AMJul 21 2008

this problem is not to blame Bush only this have been going on since the Cold War it started in the 1970s when american planes was taken hostage with passengers and it went on until 911. The Government knew about the plane situation

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Waseemisawarrior

02:30 AMJul 21 2008

This country deserves the downfall. The legal system is a joke.

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