Maybe the treasury secretary was kidding

Not too many people think the Bush administration is trying to be funny, but what else could explain Sunday's comments by U.S. Treasury Secretary Henry Paulson that the banking system is sound? Paulson told Sunday morning television news programs that the U.S. economy would recover in several months and that problems in the banking system, exemplified by the July 11 federal takeover of IndyMac Bank, were "manageable," according to the Reuters international news service. "Our banking system is a safe and a sound one," Paulson told the CNN program "Late Edition." But earlier, Paulson told CBS that the number of banks in trouble would be growing, but was under control. "This is a very manageable situation ... our regulators are focused on it," Paulson said. That could have been reassuring, but not after Paulson said he was sure Congress would pass legislation to help shore up Fannie Mae and Freddie Mac, long mainstays of the housing industry that props up the economy. News about how strong the economy is would make more sense if banks weren't tanking, Fannie and Freddie weren't broke, gasoline wasn't $5 a gallon and the dollar was holding its value. The IndyMac Bank failure was the third largest in U.S. history and did not happen because everything is fine. The only question is whether Paulson believes his own rhetoric or understands, like most everybody else does, that it is bull.