Recovery of bailout funds predicted
OMAHA -- Henry Paulson, the former Treasury chief, and billionaire Warren Buffett said taxpayers will recover every cent paid out to banks during the economic meltdown and may even turn a profit.
The staunch Democrat investor and the Treasury secretary under President George W. Bush spoke onstage Tuesday before 2,400 at the Greater Omaha Chamber of Commerce's annual meeting.
Paulson in his recently released book defended the government, which scrambled to prevent failing U.S. banks from dragging down the global economy with them.
"As bad as this is, when we look back it's not as bad as it could have been," Paulson said.
And he said the United States is better off today than most countries.
"Every other major economy has many more significant challenges than we do," Paulson said. But he said several significant challenges remain.
Paulson said he thinks compensation is normally out of whack on Wall Street, but now in the wake of all the government bailouts, many executive pay packages are excessive.
"I think today restraint is very much in order for the top people," Paulson said.
Paulson's 500-page book, "On the Brink: Inside the Race to Stop the Collapse of the Global Financial System," offers a chronological account of the rush to prevent an economic disaster as Lehman Brothers and American International Group spun toward collapse in September 2008. Paulson served as treasury secretary from June 2006 to January 2009.
Buffett led the talk by asking Paulson about the book but didn't make many comments himself.
Buffett said Paulson's book gave him an appreciation of how well Bush understood the economy and events during the crisis.
"Through the book, I gained more appreciation for what he did in this situation," Buffett said.
But Buffett, a longtime Democrat, also pointed out Paulson's positive statements about President Obama.
Buffett praised the actions of Paulson, Federal Reserve Chairman Ben Bernanke and Paulson's successor, Treasury Secretary Timothy Geithner.
Paulson thanked Buffett, an icon to thousands of investors, who advised the former Treasury chief during the worst days of the economic downturn.
"He was a real source of strength during the financial crisis," Paulson said.
Buffett is chairman and CEO of Omaha's Berkshire Hathaway Inc., a holding company with a roughly $173 billion market capitalization.
He plowed $5 billion into Paulson's former firm, Goldman Sachs, as the company struggled.