BLOG VIEW: The Continuing Adventures Of Henry Paulson

Roughly five months from now, there will be a new administration in the White House. It seems highly unlikely that either a President McCain or a President Obama will consider retaining any members of President Bush's cabinet. However, I hope that the next president will find some way to keep the current Secretary of the Treasury, Henry Paulson, within the upper levels of the Washington power circle.

While I am not 100% supportive of every policy strategy offered by Paulson, I have long admired the focus and intelligence that he brings to his position. He has more than proven himself to be a genuine leader in times of crisis – something that occurred by default rather than design, with a conspicuously elusive president absenting himself from being the front man for his economic policies.

Paulson has clearly and cogently addressed the Congress, the investor community and the American public on the matters that face the housing market and mortgage banking industries. Even if you are skeptical of his positions, it is hard not to admire his ability to effectively communicate on matters of great complexity.

In looking ahead to the next administration, I can think of three key positions where he would excel.

The most obvious suggestion would be to keep Paulson in his current job. You know the old saying: If it ain't broke, don't fix it. I am willing to bet that the next president will probably keep most of the current economic policies in place, especially in response to the housing market crisis, so bringing in a new Treasury Secretary while keeping the old policies won't make much sense. Paulson could always resign if he feels disconnected with a new administration's culture, but having him at the helm while the crisis continues to unfold would benefit the next president (and the country, for that matter).

If that doesn't pan out, I might recommend bringing Paulson in as the chief executive of either Fannie Mae or Freddie Mac. I know that the Fannie and Freddie chiefs are not planning to leave their respective government-sponsored enterprise (GSE) spots, but it is more than obvious that the GSEs need a new direction. Last week's news of jaw-dropping losses at both Fannie and Freddie for the second quarter was disastrous, and the GSEs have traveled so far in the wrong direction that it is impossible not question the abilities of their leadership. I believe Paulson could steer either of them back on course.

The third possibility may seem offbeat, but it makes sense if you give it serious thought: having Paulson as U.S. Ambassador to the United Nations. During the midst of the current crisis, Paulson has shown a unique brand of take-charge leadership and diplomatic finesse. Considering that many of the today's global crises concern involve economic issues, and considering that the U.S. seriously needs to rebuild diplomatic bridges that were burned during the past several years, having someone with Paulson's distinctive talents and personality would prove to be beneficial.

Paulson has not tipped his hand on what his future may entail; for all we know, he may already have his next gig lined up. In any event, he is hardly resting on his laurels. Indeed, his recent proposal on the introduction of a covered bond market is uncommonly bold for someone who officially has five months left on his job.

Needless to say, we can expect Paulson to continue to earn our admiration for his remaining time at the Treasury – and for any other pursuit he chooses to follow.

– Phil Hall, editor, Secondary Marketing Executive.

(Please address all comments regarding this opinion column to hallp@sme-online.com.)

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