New Report Speaks Of Dishonest Paulson, While FDIC Calls For End To ‘Too Big To Fall’

October 5, 2009

US (ChattahBox) – A new report from Special Inspector General Neil Barofsky has exposed lies given by former Treasury Secretary Henry Paulson about the state of certain banks that received bailout funds.

According to the report, Paulson misled the public about the health of the banks that receiving funds from the 2008 Troubled Asset Relief Program.

“These are healthy institutions, and they have taken this step for the good of the economy,” Paulson had said in a public address at the time.

But banks like Citigroup Inc. and several others were, in fact, on the verge of collapse, with billions of dollars following the initials bailouts to keep them from falling.

According to Barofsky, this lie could have consequences much more serious than just the implications of how tax dollars were used.

“Statements that are less than careful or forthright — like those made in this case — may ultimately undermine the public’s understanding and support,” the report was quoted by RAW.

“This loss of public support could damage the government’s credibility and have long-term unintended consequences that actually hamper the government’s ability to respond to crises.”

This report comes along with an attempt to eliminate the ‘too big to fall’ mindset, with FDIC Chairman Sheila Bair calling on officials to end bailouts.

“We need to end ‘too big to fail’ and this needs to be an overarching policy that applies to everyone,” Bair was quoted by Reuters.

She has spoken out against what she called the ‘shadow sector’, a secretive elements to financial institutions that pull the strings beyond the usual regulations.

“If you tighten regulation of the banks even more without dealing with the shadow sector you could make the problem even worse,” she said.

She has suggested a new way of dealing with banks, forcing them, for instance, to provide a ‘living will’ on thier website to explain to shareholders and customers the outcome should they be subject to a systematic shutdown.

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