Paulson Pulls it Out

So far, the world hasn't collapsed.

Henry Paulson's finger-in-the-dyke act seems to be working. The Lehman bankruptcy has come and the markets aren't off that much. Of course, the Bank of America purchase of Merrill-Lynch helped a lot by taking another domino out of the equation. But Paulson probably did the right thing by letting Lehman go and not coming in with some giant rescue package that would have induced Barclay's or another potential suitor to stay at the table.

As a short-term player, the manager of the now quarterly Weekend at Bernanke's crisis, Paulson is holding it all together. The questions is this: Will he update his Blueprint, his larger regulatory redo, to reflect the new world we're in. If there's a great gift he could leave before leaving the Treasury Department on January 20, it's to offer up a new regulatory scheme that's fitting for the world we're in.

There's still the AIG mess to clean up and the larger prospects of recession coming. But for the moment, Paulson seems to have pulled it out. It'll be interesting to see what he says at 1:30.

Matt Cooper

For more on the crisis on Wall Street, read these:

-- Shock to the System.
-- Investment Bank, R.I.P.
-- Paulson Pulls It Out.
-- Day of Reckoning on the Street.
-- Market Movers: Wall Street Huddles for Safety.
-- Helicopter Ben Strikes Again.