Senator Bunning Says Paulson Acts Like Socialist, Should Resign
2008-09-09 17:44:34.60 GMT
By Matthew Benjamin
Sept. 9 (Bloomberg) -- Senator Jim Bunning said Treasury
Secretary Henry Paulson, by rescuing Fannie Mae and Freddie Mac,
is acting like China's finance minister and both Paulson and
Federal Reserve Chairman Ben S. Bernanke should step down.
``I sincerely believe that Henry Paulson and Ben Bernanke
should resign,'' said Bunning, a Republican from Kentucky on the
Senate Banking Committee. ``They have taken the free market out
of the free market.''
Paulson and the federal regulator for Fannie and Freddie
placed the two largest U.S. mortgage-finance companies in a
government-operated conservatorship on Sept. 7, ousting their
chief executives and eliminating their dividends. Treasury also
may purchase up to $200 billion of stock in the firms to keep
them solvent.
``We no longer have a free market in the United States, we
have a government controlled free market,'' Bunning said in an
interview. Paulson, a former chief executive officer of Goldman
Sachs Group Inc., ``is acting like the minister of finance in
China.''
Bunning, 76, criticized Paulson's successful effort in July
to obtain congressional authority to pump unlimited amounts of
money into Fannie and Freddie to keep them afloat.
``When I picked up my newspaper yesterday, I thought I woke
up in France. But no, it turned out it was socialism here in the
United States,'' he told Paulson at a July 15 Senate Banking
Committee hearing.
Following Paulson's Sept. 7 announcement of the takeover of
Fannie and Freddie, Bunning said he now feels like a citizen of
China.
Former Phillies Pitcher
``No company fails in communist China, because they're all
partly owned by the government,'' said the former pitcher for the
Philadelphia Phillies.
Bunning accused Paulson of deception when he told Congress
in July that the Treasury's plan would instill such confidence
among investors that it would never have to be used.
Paulson ``saw and knew what was happening, and didn't tell
the truth to the banking committee,'' Bunning said yesterday.
Treasury spokeswoman Michele Davis didn't respond to
requests for comment.
Bunning, a critic of former Fed Chairman Alan Greenspan,
faults Bernanke for lax supervision of the mortgage market.
The Fed chief waited too long to require lenders to change
how they write mortgages, Bunning said. ``I mean he just did it
two months ago. Come on.''
When asked if he expects more multibillion dollar rescues by
Treasury, Bunning said, ``You bet I do.''
He said Paulson on Sept. 7 should have detailed an overhaul
in the business model of Fannie and Freddie.
Bunning predicted in July that, contrary to statements by
the Treasury, Paulson would provide capital to Fannie and
Freddie.
``Every time we propose and do something, it always gets
used,'' he told Paulson at the July banking committee hearing.
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--With reporting by Rebecca Christie in Washington. Editors:
James Tyson, Carlos Torres
To contact the reporters on this story:
Matthew Benjamin in Washington at +1-202-624-1971 or
mbenjamin2@bloomberg.net.
To contact the editor responsible for this story:
Chris Anstey at +1-202-624-1972 or
canstey@bloomberg.net.