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Dear Mr. Paulson,

I want to thank you for your public service to our great country.  You have done a heroic job in the face of a serious financial crisis.  I recall you didn’t much aspire to the post of Treasury Secretary, but after several requests from the administration, you accepted the job.  American is fortunate that you did.

I don’t know of a single person who would have wanted to be in your shoes while the financial crisis was unfolding.  Now, everyone is a critic.  The voices of criticism come from the media, people in the financial industry, political pundits and from members of Capitol Hill.

Whether it is for cheap populism from politicians in Congress or for sensationalism from the media or ideological grandstanding from the pundits, I doubt a single one of them could have handled the crucial decision making which was required.

The financial markets worldwide were truly in immediate peril, starting with the Bear Stearns situation.  Thankfully, you were cool under fire and worked with those around you to find a 24 hour solution.  Then along came AIG and Lehman and IndyMac and Merrill and WaMU and Wachovia, each requiring critical decisions and quick action.  I recall quite clearly, it was the public, the media and those on Capitol Hill, including many of your current critics, who cried out “you can’t save everyone, the line must be drawn”.  Now after months of hindsight these same voices claim Lehman should have been saved.  Maybe so, but then what happened to their ideology of drawing the line?  Maybe like all of us, we learn as we go, especially when we are rowing in unchartered waters, alone.

It’s so easy to be a critic.  No qualifications are required.  No experience need be represented.  Hell, one can even be a central figure with regard to the genesis of the problems and still qualify as a critic.  Often these are the most vociferous ones.

Fortunately for America you are the type you say you are, one who runs toward problems, not away from them.  This is the most vital form of leadership one can exhibit.  Bravo.  I’ll bet you your bottom dollar that if any of those media or congressional critics were thrown into the same emergency situation with worldwide financial markets on the verge of collapse and depending upon the urgency of getting huge transactions done over a weekend to avert a breach of the financial system, they could not handle it.

The most outspoken critics of yours today are the very same people who, if faced with those grave emergencies with no luxury of time and process, would find themselves curled up on the floor in the fetal position and shivering like a leaf as if they had been naked for hours on a cold winter campground.

Your actions clearly plugged the dyke.  The systemic risk to the financial system was grave.  The money from the TARP you requested and received was a critical factor in securing the perimeter.  It didn’t solve all the problems but it bought time and it took away the imminent threat of major systemic banking failure.  That was the most important thing you could accomplish and your group accomplished it.  These other folks who now run around Washington taking potshots at how TARP money was allocated are not leaders.  They are cowards.  Many of them are quite visible at the core of the problems you eventually had to confront and that Americans are now paying the price for, but now they speak and act as if they are coming in to save the day.

These are the same people who failed in their oversight and failed in their legislative actions of years gone by.  Now they think they have answers.  And in particular, they think they have better ones than you had.  Even with the benefit of months of observation and analysis of the financial markets since government stepped in, I can assure you those folks don’t have any answers.  They just want to rewrite history and seize political opportunity.  Same as always.

Now these critics cry and complain that the TARP money wasn’t used a certain way, or that banks aren’t rushing out to make risky loans in a still treacherous economy, instead of sensibly leaving the capital in tact as a stabilizing asset.

If these pretenders have their way, they will destabilize all that you have stabilized.  Clearly those who fostered the problem still don’t understand it and they are the least likely of all to provide solutions.

To listen to Congress one would think they had nothing to do with allowing these problems to manifest themselves for 20 years.  Who repealed Glass-Steagall?  Who created Sarbanes-Oxley?  Who lowered the barrier for encouraging aggressive risky loan making by enabling Fannie Mae to take loans off bank balance sheets and package them up for resale?  Who protected Fannie Mae from every outside inquiry?  Who defended Fannie Mae every time questions were raised?  These knuckleheads in Washington were largely responsible for the financial crisis and they act as if they had nothing to do with it.  And now they think they know what should have been done with TARP money and how banks should treat capital.  Such wisdom we must endure.

Mr. Paulson, you did a fine job.  There is no perfect answer to a crisis the magnitude for which no book has been written.  You met the challenge.  You evaluated a constantly changing situation to adjust your strategies.  You took action in moments when time was of the essence.  You boldly confronted a 21^st century problem with an antiquated tool bag.  If things go well, as we all hope they do, the $350 billion will in 5 years turn into $700 billion and provide a nice down payment on the federal deficit.   Should things work out that way, don’t expect praise from these critics, as they will be busily focused on finding blame and spreading public criticism toward other individuals with regard to new events which have since lured them in.

If I ever find myself in a cold dark foxhole in a strange land under threat of harm, and it’s late at night and I’m worn out from the action of the day and suddenly…. the perimeter gets tripped…. I would hope the other guy in the foxhole is you or someone just like you.

I have elected to publish this letter openly on my stock market blog to make the public more aware of a viewpoint that in my opinion, requires greater attention.  Thank you for your service.

Best of luck in your future endeavors.

I am a proud American citizen,


Glenn Cutler