Paulson Downplays Subprime Fallout

From the WSJ:

Treasury Secretary Henry Paulson, in an interview with the Wall Street Journal, downplayed the potential broader economic fallout from the current subprime lending turmoil.

“You need to look at the underlying economy. We’ve got in my judgment a healthy economy,” Mr. Paulson said.

“The fundamental question is, has that market bottomed out?” he added. “I’m optimistic that it has, I don’t know for sure, I think the next couple of months we’ll know a lot more than we know now.”

He acknowledged that the wave of foreclosures has been “distressing” to “individual mortgage holders,” but said that “the distress of the subprime mortgage market is something that should have been anticipated given the housing correction.”

Mr. Paulson said: “From the standpoint of the overall economy it’s largely contained.” –

Hmmm. Interesting that Paulsen downplays the subprime turmoil. What is amazing that Goldman Sach company are eyeing the subprime lending operations...

Goldman Goes Hunting In Battered Loan Sector After a Record Quarter

Seeing growing turmoil in the market for risky home loans as an opportunity, Goldman Sachs Group Inc. is looking at pushing deeper into the business, ramping up its own subprime-lending operation and pondering the purchase of another.

On the heels of reporting record and expectation-smashing fiscal first-quarter profits that kicked off Wall Street's earning season, Goldman Chief Financial Officer David Viniar indicated that the brokerage is perusing the subprime sector for fire-sale prices.

Goldman's plans come amid a meltdown in the subprime-mortgage market, which caters to higher-risk borrowers with sketchy credit records and lower incomes.