CNBC Press Releases

PAULSON: I WOULD NEVER TAKE INTERVENTION OFF THE TABLE OR ANY POLICY TOOL OFF THE TABLE.I JUST CAN'T SPECULATE ABOUT WHAT WE WILL OR WON'T DO.

LIESMAN: YOU'RE GOING SHORTLY TO JAPAN FOR A SUMMIT OF THE G-7.

PAULSON: RIGHT.

LIESMAN: AT THE UPCOMING MEETING WILL BE BE TALKING ABOUT GLOBAL FOOD PRICES AND HIGHER INFLATION AROUND THE WORLD?

PALUSON: WE'LL TALK ABOUT ECONOMIC ISSUES AND YOU CAN'T TALK ABOUT ECONOMIC ISSUES WITHOUT TALKING ABOUT ALL THREE OF THOSE AS WELL AS A NUMBER OF OTHERS.

LIESMAN: WHAT DO YOU EXPECT TO COME OUT OF THE MEETING THAT MIGHT BE OF USE TO INVESTORS AND ORDINARYAMERICANS?

PAULSON: WELL, I WOULD SAY IT'S ALWAYS OF GREAT VALUE TO TALK WITH OTHER POLICYMAKERS FROM AROUND WORLD AND TO GIVE THEM AN UPDATE ON WHAT'S HAPPENING IN OUR ECONOMY AND MARKETS AND HEAR WHAT'S HAPPENING IN THEIRS BECAUSE THAT BUILDS UP A LEVEL OF TRUST AND CONFIDENCE SO WE'RE ABLE TO GET ON THE PHONE AND COMMUNICATE WHEN THE SITUATION CALLS FOR IT.

LIESMAN: NEW YORK FED PRESIDENT TIM GEITHNER JUST MOMENTS AGO BEFOREWE HAD A CHANCE TO TALK WAS TALKING ABOUT GREATER REGULATION OF LARGE INSTITUTIONS. RIGHT NOW INVESTMENT BANKS HAVE ACCESS TO THE DISCOUNT WINDOW AND NO CAPITAL LIQUIDITY RATIO INCREASES AS A RESULT OF GETTINGTHAT ACCESS.DOES THAT HAVE TO CHANGE?

PAULSON: WELL, LET ME BEGIN TO SAY I VERY MUCH AGREE WITH WHAT TIM SAID.IT'S VERY CONSISTENT WITH THE REGULATORY BLUEPRINT THAT WE PUTOUT OF TREASURY IN MARCH AND THE WORLD'S CHANGED A LOT SINCE WE PUT OUR REGULATORY SYSTEM IN PLACE AND NON-BANK FINANCIAL INSTITUTIONS, INVESTMENT BANKS AND HEDGE FUNDS ARE PLAYING A BIGGER AND MORE IMPORTANT ROLE ON THE ECONOMY AND REGULATION NEEDS TO BE UPDATED, TO CATCH UP WITH THAT AND SO I AGREE WITH THAT AND, OF COURSE, WE ULTIMATELY BELIEVE THAT THE FEDERAL RESERVE IS GOING TO NEEDGREATER VISIBILITY AND TO ALL COMPLEX, FINANCIAL INSTITUTIONS NEED SOME POWER TO INTERVENE.

LIESMAN: WHEN YOU SAY YOU AGREE WITH THAT, ARE YOU AGREEING WITH THE IDEA OF GREATER CAPITAL AND LIQUIDITY LEVELS?AND RETURN FOR ACCESS?

PAULSON: TO DEAL WITH A VERY SPECIFIC SITUATION.CLEARLY, THE FED NEEDS GREATER VISIBILITY AND AUTHORITY INTO THESE INVESTMENT BANKS AS LONG AS THEY'VE OPENED UP THE DISCOUNT WINDOW.THERE'S NO DOUBT ABOUT THAT AND I'M SPENDING A FAIR AMOUNT OF TIME RIGHT NOW WITH BEN BERNANKE, TIM GEITHNER AND CHRIS COX IN WORKING THROUGH SOME OF THE BALANCING OBJECTIVES THAT NEED TO BE TRADED OFF HERE.

LIESMAN: WHEN CAN WE EXPECT THEM FOR THE DECISION?

PAULSON: WELL, LET'S LEAVE THAT TO THEM TO POST, BUT LET ME SAY THAT THE TWO THINGS YOU NEED TO TRADE OFF ARE, FIRST OF ALL, IS UPDATING THE REGULATORY POLICIES SO THAT THEY ARE REFLECTIVE OF THE WORLD WE LIVE IN AND THE SECOND THING YOU NEEDTO TRADE OFF IS MARKET DISCIPLINE.THEY A ROLE FOR MARKET DISCIPLINE AND MORAL HAZARD.

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