Paulson cannot be allowed a blank cheque

Paulson cannot be allowed a blank cheque
폴슨은 백지수표를 쓸 수 없을 거다.
By George Soros

Published: September 24 2008 20:28 | Last updated: September 24 2008 20:28

Hank Paulson’s $700bn rescue package has run into difficulty on Capitol Hill. Rightly so: it was ill-conceived. Congress would be abdicating its responsibility if it gave the Treasury secretary a blank cheque. The bill submitted to Congress even had language in it that would exempt the secretary’s decisions from review by any court or administrative agency – the ultimate fulfillment of the Bush administration’s dream of a unitary executive.
ill-conceived:발상이 나쁜 abdicating:포기하다 unitary :단일
폴슨의 발상은 좋지 않다. 의회는 이를 받아들여서는 않된다.

Mr Paulson’s record does not inspire the confidence necessary to give him discretion over $700bn. His actions last week brought on the crisis that makes rescue necessary. On Monday he allowed Lehman Brothers to fail and refused to make government funds available to save AIG. By Tuesday he had to reverse himself and provide an $85bn loan to AIG on punitive terms. The demise of Lehman disrupted the commercial paper market. A large money market fund “broke the buck” and investment banks that relied on the commercial paper market had difficulty financing their operations. By Thursday a run on money market funds was in full swing and we came as close to a meltdown as at any time since the 1930s. Mr Paulson reversed again and proposed a systemic rescue.
discretion:자유재량 punitive:징벌의 demise:소멸 disrupted:붕괴
폴슨이 7000억 달러면 해결할 수 있다고 했지만 이제 까지 그가 해 왔던 일들을 보면 믿음을 주기 어렵다. 폴슨은 에이아이지를 구제하지 않겠다고 했다가 징벌적 구제안이라는 명목을 들고 나와 돈을 쏟아부었다. 리먼이 망하자 기업어음시장이 붕괴되었는 데 폴슨은 또 다시 구제책을 제시했다.

Mr Paulson had got a blank cheque from Congress once before. That was to deal with Fannie Mae and Freddie Mac. His solution landed the housing market in the worst of all worlds: their managements knew that if the blank cheques were filled out they would lose their jobs, so they retrenched and made mortgages more expensive and less available. Within a few weeks the market forced Mr Paulson’s hand and he had to take them over.
retrenched:긴축하다.
폴슨은 이미 백지수표를 사용했다. 프레디매와 패니맥을 구제하기 위해 그는 공적자금을 투입했다.

Mr Paulson’s proposal to purchase distressed mortgage-related securities poses a classic problem of asymmetric information. The securities are hard to value but the sellers know more about them than the buyer: in any auction process the Treasury would end up with the dregs. The proposal is also rife with latent conflict of interest issues. Unless the Treasury overpays for the securities, the scheme would not bring relief. But if the scheme is used to bail out insolvent banks, what will the taxpayers get in return?
distressed:투매한 poses:문제를 일으키다. dregs:찌꺼기 rife:나쁜 것이 가득찬 latent:잠재적인
scheme:계획 insolvent:부실한
시장에 나온 모기지관련 채권을 정부가 매수하겠다는 폴슨의 정책은 정보의 비대칭성 문제를 불러왔다. 파는 사람은 모기지채권의 가치를 알지만 매수자는 모른다. 이해관계가 충돌할 위험도 있다. 정부가 채권가격에 웃돈을 주지 않으면 회사는 회생할 수 없다. 그러나 부실한 은행을 걸러내려는 계획이라면 세금을 내는 사람들에게 돌아오는 것은 무엇인가?

Barack Obama has outlined four conditions that ought to be imposed: an upside for the taxpayers as well as a downside; a bipartisan board to oversee the process; help for the homeowners as well as the holders of the mortgages; and some limits on the compensation of those who benefit from taxpayers’ money. These are the right principles. They could be applied more effectively by capitalising the institutions that are burdened by distressed securities directly rather than by relieving them of the distressed securities.
ought to:당연하다. imposed:부과한 bipartisan:초당파적인
오바마의 네가지 제안: 1.... 2.초당파적 기구 설립. 3. 모기지채권자만큼 주택보유자 지원 4. 공적자금을 받는 기업의 수당 제한. 정부가 채권을 자본화 해서 보유 하라는 뜻? 채권업체는 죽이고?

The injection of government funds would be much less problematic if it were applied to the equity rather than the balance sheet. $700bn in preferred stock with warrants may be sufficient to make up the hole created by the bursting of the housing bubble. By contrast, the addition of $700bn on the demand side of an $11,000bn market may not be sufficient to arrest the decline of housing prices.
sufficient:충분하다
기업에 돈을 채워 넣는 것보다 주식시장에 돈을 푸는게 더 낫다. 7000억 달러로 신주인수권을 가진 우선주를 사면 버블이 터진 시장의 붕괴를 막을 수 있다. 반면에 수요부문은 11조시장이기 때문에 7000억달러를 풀어도 효과는 적다.

Something also needs to be done on the supply side. To prevent housing prices from overshooting on the downside, the number of foreclosures has to be kept to a minimum. The terms of mortgages need to be adjusted to the homeowners’ ability to pay.
공급부문에도 조치를 취해야 한다. 주택가격이 떨어지지 않도록 모기지 계약내용을 바꿔 주택소유주가 주택을 보유한 채로 채무를 갚을 수 있게 바꿔야 한다.

The rescue package leaves this task undone. Making the necessary modifications is a delicate task rendered more difficult by the fact that many mortgages have been sliced up and repackaged in the form of collateralised debt obligations. The holders of the various slices have conflicting interests. It would take too long to work out the conflicts to include a mortgage modification scheme in the rescue package. The package can, however, prepare the ground by modifying bankruptcy law as it relates to principal residences.

Now that the crisis has been unleashed a large-scale rescue package is probably indispensable to bring it under control. Rebuilding the depleted balance sheets of the banking system is the right way to go. Not every bank deserves to be saved, but the experts at the Federal Reserve, with proper supervision, can be counted on to make the right judgments. Managements that are reluctant to accept the consequences of past mistakes could be penalised by depriving them of the Fed’s credit facilities. Making government funds available should also encourage the private sector to participate in recapitalising the banking sector and bringing the financial crisis to a close.


The writer is chairman of Soros Fund Management