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Paulson's Fill-In At Markets Conference Talks About Bailout

At the Securities Industry and Financial Markets Association Annual Meeting, New York.

Though Acting Under Secretary for Domestic Finance Anthony Ryan was a fill-in for no-show Hank Paulson, and although he left fairly quickly after his speech, he did make a number of important points:

1) He said that the debt and mortgage-backed securities of Fannie Mae and Freddie Mac, both existing and to be issued, was guaranteed by the government. However, as Deutsche Bank noted, this support rests on the Treasury plan which only provides capital and credit until the end of 2009. Traders are still awaiting some future statement that the guarantee will be explicity and permanent;

2) Regarding the capital purchase program, he noted that the $125 billion in capital that is supposed to be delivered to nine major institutions would be delivered TODAY;

3) Regarding the TARP program, he noted that Treasury would continue to increase the auction size of its bills and coupon securities programs, and that Treasury is considering the re-introduction of the three year note, beginning in November 2008.

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