Another thing I should have mentioned about Paulson’s testimony is that he left the door open for the possibility that in addition to mortgage securities, the bailout could include credit cards, student loans, and auto loans. (U.S. consumer debt — excluding mortgages — is $2.6 trillion.) While he wouldn’t say so directly, he kept emphasizing that though troubled mortgage assets were the main problem, he’d want the flexibility to also purchase investments in other asset classes as part of the overall plan to restore liquidity to the market. This raises serious questions about the potential for mission creep that he didn’t have a clear answer for today.
