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MR. BROKAW: Well, let's talk first of all about how this happened. Is it as a result of speed and the complexity of these instruments now, and the fact that no one really has their hand on the instruments that they're selling, they just pass them along?
SEC'Y PAULSON: Tom, that is one of the reasons. There have been excesses, I said, for a long time. We have overcomplexity. Mortgages are now securitized, sliced and diced, put into tranches, sold all over the world. There is a great deal of risk into this--in, in the system. That is one of the reasons. As I said, there's just been irresponsible practices. Borrowers have done things that were irresponsible also. But there's a lot of, a lot of mistakes made.
[...]SEC'Y PAULSON: Tom, there are a lot of questions, and I can understand there are a lot of questions. This is an urgent matter, and we need to move very quickly. But let me get to the first question. Yes, the cost. You know, I don't like the fact the taxpayer's being put in this position, but the numbers that are being used, which are--you know, we're talking about hundreds of billions of dollars--remember, this is not an expenditure, this is money that is being used to purchase these assets, as you said, these illiquid mortgage assets, which are very difficult to value. They will be held, and then they will be resold at some time. And so we can't determine what the cost is today. That's going to be based upon how quickly the economy recovers, what happens in the mortgage market. But I can assure you the cost won't be anything like what is put out to buy these investments and these assets. And when the assets are sold, the money will come back into the treasury.
But, again, this in not a position where I like to see the taxpayer. But it is far better than the alternative. The situation we had last week, where credit markets were frozen--you know, the stock market, the average American watches the stock market. They watched the stock market drop about 1,000 points and then recover on the news of this plan. But what they don't see is what's going on in the credit markets. And when companies can't borrow money and--this has a big impact on everyone. It's difficult to get jobs, it hurts people's budgets, retirement savings. This is a serious situation, and we need to avoid this.
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