FT Calls Out the Administration on its “Corner”

The Financial Times is appropriately skeptical of Treasury Secretary Paulson and Fed Chairman Bernanke and their assertions that “we have turned the corner” on the crisis.

The paper neatly juxtaposes their optimism with news that credit-default swap prices soared to a record yesterday, meaning investors are betting that more companies will go broke. And it notes that Congress is questioning Paulson’s leadership, even if the Washington Post is not.

“I think there is a crisis of confidence that is in the general public and within this body of the Congress,” Paul Kanjorski, a Democratic representative, told Mr Paulson.

“We are trying to figure out… the 180 degree change that you made in policy.”

And oh yeah, what about the housing bust?

Meanwhile, the Treasury secretary came under intense pressure from Democrats to use money from the bail-out fund to back home loan modifications.

“The fundamental policy issue is our disappointment that funds are not being used out of the $700bn to supplement mortgage foreclosure reduction,” said Barney Frank, chairman of the House financial services committee.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.