When you have done as much damage to taxpayers and the economy as Paulson has, one just might expect for him to go into hiding until the next administration fires him.
However, that would be wishful thinking as Paulson Seeks Resolution Trust Corporation “Solution”.
CNBC’s Gasparino reports his Wall Street sources say that Treasury Secretary Paulson is talking about a Resolution Trust Corporation-type solution to the current crisis. The RTC was created during the savings and loan crisis of the 80s.
Financials as a whole are providing leadership with a 6.3% gain. Diversified banks (+10.4%) and thrifts & mortgage (+7.9%) stocks are rallying, although there is weakness in investment banks (-10.0%) and asset management (-13.8%) firms.
The consolidation of financial firms and government intervention is not happening just in the United States. U.K. banking giant Lloyds TSB Group (LYG 21.03, +1.92) announced this morning that it is acquiring struggling U.K. mortgage lender HBOS in an all-stock deal valued at 12.2 billion pounds ($22.2 billion). The U.K. government brokered the deal, and is overriding anti-monopoly regulations, according to reports.
Take the estimated cost of this proposal and multiply it by a factor of ten. I reserve the right to change that call when more specifics are announced. Of course this could be nothing more than another bazooka play.
Mike “Mish” Shedlock
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