Paulson: Mortgage Assistance Is a Backup Plan

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

WASHINGTON — Treasury Secretary Paulson said today the Bush administration has no immediate plans to extend emergency loans to mortgage giants Fannie Mae and Freddie Mac or to purchase the stock of the two companies.

Mr. 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 Mr. Paulson’s appearance, Sen. Jim Bunning, a Republican of Kentucky, told the 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,” Mr. 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.

Mr. 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,” Mr. 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.”

Mr. 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.


The New York Sun

© 2025 The New York Sun Company, LLC. All rights reserved.

Use of this site constitutes acceptance of our Terms of Use and Privacy Policy. The material on this site is protected by copyright law and may not be reproduced, distributed, transmitted, cached or otherwise used.

The New York Sun

Sign in or  Create a free account

or
By continuing you agree to our Privacy Policy and Terms of Use