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July 13, 2008

WSJ: Treasury's Vulcan Strategy for Fannie/Freddie

So much for the rumored $15b Treasury infusion into Fannie Mae and Freddie Mac. That is one message you could take from a story on the WSJ front page right now, essentially saying that later today Treasury will instead make a "statement of facts designed to reassure markets".

What is Treasury Secretary Henry Paulson, a lapsed Vulcan? He thinks logic and carefully-reasoned argument are just what the market has been waiting for. While I applaud his optimism, the market's response to reason will be anything but predictable.

The FT has more, with Paulson, NY Fed head Tim Geithner, and Fed chair Bernanke  having met over the weekend to come up with a firm U.S. government stance in advance of Asian markets opening Monday. Trouble is, according to the FT, the situation remains "fluid", and while some sort of agreement has been reached, it could all change before the day is done.

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