WASHINGTON–U.S. Treasury Secretary Henry Paulson called the financial crisis plaguing the world economy a once-or-twice-in-a-century event, even as he warned against imposing too-strict regulations to prevent a repeat calamity.
Paulson's remarks follow pledges by world leaders attending last week's emergency economic summit to begin an overhaul of the world's financial regulatory system.
With the next summit slated for the spring, the work on fleshing out details for the Herculean task will fall to the incoming administration of president-elect Barack Obama and his new Treasury secretary.
Paulson, whose boss President George W. Bush leaves office Jan. 20, acknowledged the financial crisis was caused by many factors.
Still, he cautioned against the United States and other countries developing a too-onerous regulatory response.
Earlier this week, legislators blasted Paulson for his handling of a $700-billion financial bailout package to help ease the crisis and restore stability and confidence to unhinged markets.
Paulson again defended his management today, including his decision last week to officially abandon the original rescue strategy: buying rotten mortgages and other bad debts from banks to free up their balance sheets and get them to lend more freely.
"By proactively addressing the problems we saw coming and being pragmatic enough to change strategy in the face of changed facts and despite the inevitable criticism – we prevented a far worse financial crisis," Paulson insisted.
Focusing the bailout program on infusing billions into banks – and possibly other types of companies – to pump up their capital and bolster lending to customers was deemed a faster and more effective approach to stabilizing the financial system than the original centrepiece of the plan, he said.
14:28ET 20-11-08
