But he now proposes to let some homeowners replace their subprime mortgages with federally guaranteed loans.
The two Leviathans have squeezed private firms into the riskiest ends of the mortgage market, such as subprime lending.
He, like other prognosticators (including Greenspan), points to his lack of understanding of the profound effects that subprime lending was having on housing markets.
The economists tracked down a large number of subprime borrowers in New England on whom they already had detailed information, including the terms of their mortgages and their repayment histories.
This was not subprime lending.
Even if direct financial contagion is contained, America's subprime crisis could spawn psychological contagion, particularly a reassessment of house prices.
But the subprime crisis that had begun in America was beginning to infect the central European property market, making the role of underwriter a risky one.
It wasn't just Alan Greenspan's unwillingness to admit that there was anything more than a bit of "froth" in housing markets, or his refusal to do anything about subprime abuses.
After all, sitting and waiting is how we made money from the subprime debacle.
Even if a fifth of the $650 billion of adjustable-rate subprime loans went bad, that would be a blip in the $40 trillion market for debt.
That was not the creation of subprime debt, nor the culture of excess on Wall Street, but the decision to grow bigger in their home market rather than try to dominate global banking.
I find this interesting because it calls to mind some of the problems we had with the subprime crisis.
Paulson (#20 on the Forbes 400) famously hit it big by betting against subprime mortgages during the bubble, then made a big move into some of the most battered U.S. banks last year.
As documented in his paper, the subprime mess was preceded by a lending bonanza and a weakening of credit standards.
I'm just glad we finally have these credit and subprime mortgage loan crises behind us.
Wall Street's second-quarter results are being closely watched because of fears that soaring US subprime mortgage delinquencies, rising interest rates and choppy equity markets are bringing an end to the near-perfect conditions that led to record first-quarter profits.
It owns a subscale retail operation in America but did not go on a subprime bender.
Banks will also suffer from their exposure to failed hedge funds, just as some have already been hit by their exposure to the subprime mortgage market.
For some, this is a worrying trend, with echoes of the subprime housing crisis, in which financial innovation went out of control.
