Paulson sees mortgage assistance as backup
WASHINGTON (AP) - July 15, 2008 Paulson told the Senate Banking Committee that the assistance
plan put together by the administration and the Federal Reserve
over the weekend was intended to serve as a backup if needed.
He said that if the government extends any financial backing to
the two institutions it will be done "under terms and conditions
that protect the U.S. taxpayer."
Before Paulson's appearance, Sen. Jim Bunning, R-Ky., told
Federal Reserve Chairman Ben Bernanke that he was very upset with
the rescue package for Fannie and Freddie that had been unveiled on
Sunday.
"The Treasury secretary is asking for a blank check to buy as
much Fannie and Freddie debt as he wants for this unprecedented
intervention in our free markets," Bunning said, questioning
whether the government had gotten any assurances from the two
mortgage giants that the problems they are facing will not be
repeated.
Other senators, in their opening remarks, also expressed
questions about what the administration was proposing. The
administration is hoping that Congress will quickly pass
legislation needed to put parts of its rescue proposal into effect.
Paulson in his remarks sought to assure lawmakers that what the
administration is proposing will not put taxpayers at undue risk.
He said the plan was necessary to help the nation's battered
housing market get back on its feet and relieve stresses in
financial markets where investors are worried about a rising tide
of bad mortgage loans.
"Our plan is aimed at supporting the stability of financial
markets, not just these two enterprises," Paulson said, referring
to Fannie and Freddie. "This is consistent with Treasury's mission
to promote the market stability, orderliness and liquidity
necessary to support our economy."
Paulson said that it was essential for the government to put
together a backup assistance package, given the important role the
two companies play in supporting the housing market.