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Paulson claims Russia tried to foment Fannie-Freddie crisis
Financial Times ^ | Published: January 29 2010 21:06 | By Krishna Guha in Washington

Posted on 01/29/2010 4:06:54 PM PST by lwd

Russia proposed to China that the two nations should sell Fannie Mae and Freddie Mac bonds in 2008 to force the US government to bail out the giant mortgage-finance companies, former US Treasury secretary Hank Paulson has claimed.

The allegation is in his memoir On the Brink in which he also suggests that Alistair Darling, the UK chancellor, blocked a rescue takeover of Lehman Brothers by Barclays Bank when he refused to support special treatment by UK regulators.

“Russian officials had made a top-level approach to the Chinese, suggesting that together they might sell big chunks of their GSE holdings to force the US to use its emergency authorities to prop up these companies,” he said.

Fannie and Freddie are known as GSEs or government sponsored enterprises.

“The Chinese had declined to go along with the disruptive scheme, but the report was deeply troubling,” he said. A senior Russian official told the Financial Times that he could not comment on the allegation.

Separately, Mr Paulson makes it clear that he believes that Mr Darling prevented a takeover of Lehman by Barclays out of fear that it would endanger the UK bank.

Mr Paulson said that Mr Darling telephoned him on Friday September 12 – as the US authorities were scrambling to find a buyer for Lehman – to express concern about a possible Barclays deal. Mr Paulson said that he did not realise at the time that this was a “clear warning”.

(Excerpt) Read more at ft.com ...


TOPICS: Business/Economy; Front Page News; News/Current Events; Russia
KEYWORDS: 2008; alistairdarling; barclaysbank; bookdeals; bric; china; darling; economicattack; economiccollapse; economiccrisis; economicterrorism; economicwarfare; economy; fanniemae; financialattack; financialcollapse; financialcrisis; freddiemac; gsa; gse; hankpaulson; lehmanbrothers; onthebrink; paulson; russia
Let's try this again, last article got zapped since it was bloomberg via buisness week. I checked closely and didn't see FT on the "no post list". I hope that's the case.
1 posted on 01/29/2010 4:06:54 PM PST by lwd
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To: lwd

Why should they bother? We have our homegrown commies doing just fine.


2 posted on 01/29/2010 4:07:53 PM PST by Tijeras_Slim (Live jubtabulously!)
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To: Tijeras_Slim

And why would they, our “friends,” do such a thing?


3 posted on 01/29/2010 4:15:14 PM PST by patriot preacher (To be a good American Citizen and a Christian IS NOT a contradiction. (www.mygration.blogspot.com))
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To: lwd

I trust Putin over Paulson.


4 posted on 01/29/2010 4:16:37 PM PST by Cheap_Hessian (I am the Grim FReeper.)
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To: Cheap_Hessian

At least Putin is not trying to sell a book.


5 posted on 01/29/2010 4:17:29 PM PST by Cheap_Hessian (I am the Grim FReeper.)
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To: lwd
Russia proposed to China that the two nations should sell Fannie Mae and Freddie Mac bonds in 2008 to force the US government to bail out the giant mortgage-finance companies, former US Treasury secretary Hank Paulson has claimed.

Why? Because they recognized the instability of it and wanted us to straighten up before it damaged the economy of the whole world?

Those evil bastids! /s

6 posted on 01/29/2010 4:17:45 PM PST by TigersEye (It's the Marxism, stupid!)
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To: lwd

I wouldn’t trust Paulson if he said the earth moves around the sun.


7 posted on 01/29/2010 4:20:11 PM PST by RogerQ
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To: Cheap_Hessian
I was about to ping you to this thread! You (and many others, including me) thought this was the case a year ago.

Here's the Thread

8 posted on 01/29/2010 4:20:54 PM PST by lwd
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To: lwd

Russia and China are our real enemies. Russia is arming Iran with nukes, and China could shut down DPRK any time they chose, but they keep these puppets or clients going to drain power and money from us. Meanwhile we treat Russia & China as diplomatic “partners” who will help us solve the problems caused by Iran and DPRK!


9 posted on 01/29/2010 4:22:50 PM PST by hellbender
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To: lwd

Wow, you have a good memory! It’s interesting how little has changed from a year ago. This economic purgatory has lasted longer than I expected.


10 posted on 01/29/2010 4:38:59 PM PST by Cheap_Hessian (I am the Grim FReeper.)
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To: hellbender

I’m more nervous about China militarily, but Russia knows how to run circles around us diplomatically. I agree with your assessment on their relation with North Korea and Iran.


11 posted on 01/29/2010 4:44:52 PM PST by Cheap_Hessian (I am the Grim FReeper.)
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To: lwd
"Paulson claims Russia tried to foment Fannie-Freddie crisis"

Paulson thinks Barney Frank, Rahm Emanuel, Franklin Raines are Russian????

12 posted on 01/29/2010 4:45:11 PM PST by DaveTesla (You can fool some of the people some of the time......)
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To: TigersEye

Well, Mr. Awesome Paulson also saved us from 25% unemployment by bailing out AIG.


13 posted on 01/29/2010 4:49:12 PM PST by Cheap_Hessian (I am the Grim FReeper.)
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To: lwd

Method of attack is not unusual; GSEs Fannie and Freddie were and still are the weakest point, thus the obvious targets of any scheme to undermine financial system.

The problem is that our own government not only created the system (during Roosevelt’s New Deal) but kept perpetuating it and overburdening it to the breaking point.

The problem was not the repeal of Glass-Steagall or Wall Street’s “greed”, but the government underwriting of bigger and bigger part of US economic system (FNM / FRE / FHA went from 25% of real-estate loans to around 50% in just few years) and also relaxed the “standards” for originating loan requirements.

All it needed was a little push to start a chain reaction, which could come from different places and from different angles.

Osama’s 9/11 attack didn’t cause the US and worldwide financial collapse, but he left no doubts that that was exactly what he was counting on.


14 posted on 01/29/2010 4:52:14 PM PST by CutePuppy (If you don't ask the right questions you may not get the right answers)
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To: RogerQ
I wouldn’t trust Paulson if he said the earth moves around the sun.

I'm with ya there.
15 posted on 01/29/2010 4:53:44 PM PST by cripplecreek (Seniors, the new shovel ready project under socialized medicine.)
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To: DaveTesla

LOL!


16 posted on 01/29/2010 4:55:56 PM PST by parisa
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“Russian officials had made a top-level approach to the Chinese, suggesting that together they might sell big chunks of their GSE holdings to force the US to use its emergency authorities to prop up these companies,” he said.

Can't blame the Russians... congress had plenty of warning this was coming and ignored it; well before the Russians did anything. THe blame belongs much closer to home. OCTOBER 2000 : (FANNIE MAE BUYS 2 BILLION WORTH OF SUBPRIME SECURITIES) Bear Stearns... was the first to buy subprime mortgage securities. In October of 2000, Fannie Mae purchased two billion dollars worth of these subprime securities. ------ "The CRA and Key Players, " 27 Sep 2008 by hiredhand

APRIL 2001 : () The Administration’s FY02 budget declares that the size of Fannie Mae and Freddie Mac is “a potential problem,” because “financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity.”

FEBRUARY 2003 : () The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that “although investors perceive an implicit Federal guarantee of [GSE] obligations,” “the government has provided no explicit legal backing for them.” As a consequence, unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market. (”Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO,” OFHEO Report, 2/4/03)

NOVEMBER 2003 : () Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any “legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk.” To reduce the potential for systemic instability, the regulator would have “broad authority to set both risk-based and minimum capital standards” and “receivership powers necessary to wind down the affairs of a troubled GSE.” (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03)

FEBRUARY 2004 : () The President’s FY05 Budget again highlights the risk posed by the explosive growth of the GSEs and their low levels of required capital, and called for creation of a new, world-class regulator: “The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore…should be replaced with a new strengthened regulator.” (2005 Budget Analytic Perspectives, pg. 83)

FEBRUARY 24, 2004 : () CEA [Council of the Economic Advisers ] Chairman Mankiw cautions Congress to “not take [the financial market’s] strength for granted.” Again, the call from the Administration was to reduce this risk by “ensuring that the housing GSEs are overseen by an effective regulator.” (N. Gregory Mankiw, Op-Ed, “Keeping Fannie And Freddie’s House In Order,” Financial Times, 2/24/04)

JUNE 16, 2004 : () Deputy Secretary of Treasury Samuel Bodman spotlights the risk posed by the GSEs and called for reform, saying “We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system. Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs: Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System.” -----Samuel Bodman, House Financial Services Subcommittee on Oversight and Investigations Testimony, 6/16/04

APRIL 13, 2005 : () Treasury Secretary John Snow repeats his call for GSE reform, saying “Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America… Half-measures will only exacerbate the risks to our financial system.” --------Secretary John W. Snow, “Testimony Before The U.S. House Financial Services Committee,” 4/13/05

DECEMBER 2007 : () President Bush again warns Congress of the need to pass legislation reforming GSEs, saying “These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I’ve called on Congress to pass legislation that strengthens independent regulation of the GSEs – and ensures they focus on their important housing mission. The GSE reform bill passed by the House earlier this year is a good start. But the Senate has not acted. And the United States Senate needs to pass this legislation soon.” (President George W. Bush, Discusses Housing, The White House, 12/6/07)

FEBRUARY 2008 : () : Assistant Secretary David Nason reiterates the urgency of reforms, says “A new regulatory structure for the housing GSEs is essential if these entities are to continue to perform their public mission successfully.” (David Nason, Testimony On Reforming GSE Regulation, Senate Committee On Banking, Housing And Urban Affairs, 2/7/08)

APRIL 2008 : () : President Bush urges Congress to pass the much needed legislation and “modernize Fannie Mae and Freddie Mac. [There are] constructive things Congress can do that will encourage the housing market to correct quickly by … helping people stay in their homes.” (President George W. Bush, Meeting With Cabinet, the White House, 4/14/08)...

VIA 8 posted on Wednesday, September 24, 2008 1:44:09 PM by roses of sharon

OCTOBER 24, 2008 : (MD : FANNIE MAE CONTRACTOR RAJENDRASINH MAKWANA IS FIRED FOR ATTEMPTING TO DESTROY ALL DATA ON THE MORTGAGE GIANT'S COMPUTER SERVERS NATIONWIDE USING CODE PLANTED ON OR BEFORE OCTOBER 24... THE PROGRAMMED EVENT FOR THE DATA DESTRUCTION IS JAN 31, 09)
17 posted on 01/29/2010 5:04:00 PM PST by piasa (Attitude adjustments offered here free of charge)
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To: Cheap_Hessian

I don’t know what you base that on but it is a non-sequitur in this context.


18 posted on 01/29/2010 5:26:17 PM PST by TigersEye (It's the Marxism, stupid!)
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To: lwd

What this story does not cite is the role of George Soros and that the Sept. 15th 2008 redemption of $550 BILLION worth of U.S. Treasuries in just a few hours, is what triggered the financial meltdown that cleared the path for Obama’s election.


19 posted on 01/29/2010 5:54:58 PM PST by G Larry (DNC is comprised of REGRESSIVES!)
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http://www.freerepublic.com/focus/news/2440411/posts


20 posted on 01/29/2010 6:02:15 PM PST by SunkenCiv (Happy New Year! Freedom is Priceless.)
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To: Cheap_Hessian
This is hard to believe because the Alexei Kudrin forecasts expansion of Russian economy
Vice PM and finance minister Alexei Kudrin forecasts modest growth of the Russian economy in the near future. He pointed out that Russia will be quite stable if developed markets of the US and Europe provide fairly sustainable growth.

Kudrin noted that the current crisis in the global economy and financial stimulus measures are unprecedented. Therefore, in his opinion, it is hard to say how long the countries will be able to continue “such massive cash injections and how they will influence their balance sheets as early as a year or two”, including sovereign debts which, according to his estimates, will exceed the critical level even in developed countries, which could impact the capital market environment.

The minister emphasized that for the time being it is premature and difficult to talk about steady growth of the national economies. “Goods stockpiles are on the rise, but it’s hard to say we’re seeing sustainable growth,” the vice prime minister said.

Thier stockpiles look like trouble because they need a buyer. If we have to grow now how could they did not know that two years ago. Bear Stern had a roll in a meltdown in with policies of Russia who was in energy wars with George. So maybe they learned their lesson, or waiting for the next punch to someone

21 posted on 01/29/2010 6:50:17 PM PST by wmposh
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To: piasa
Paulson Says He Was Prepared to Guarantee Lehman - BL, 2010 January 29, by Michael McKee


22 posted on 01/29/2010 8:54:10 PM PST by CutePuppy (If you don't ask the right questions you may not get the right answers)
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To: lwd

If they could do it then, they can still do it now. Paulson is saying this stuff for a reason...


23 posted on 01/29/2010 9:05:11 PM PST by April Lexington (Study the constitution so you know what they are taking away!)
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To: lwd

If they could do it then, they can still do it now. Paulson is saying this stuff for a reason...


24 posted on 01/29/2010 9:05:12 PM PST by April Lexington (Study the constitution so you know what they are taking away!)
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To: wmposh
This is hard to believe because the Alexei Kudrin forecasts expansion of Russian economy

Russia doesn't really have an "economy" in a real sense of the word, because Putin didn't diversify the Russian economy. In fact he made it even more consolidated and entirely dependent on commodities, which helps him temporarily to hold hostage and terrorize Europe, but that is as far as it goes :

Two-Speed Global Recovery On Display At Davos Gathering - CNBC, 2010 January 25, by Albert Bozzo


25 posted on 01/29/2010 9:07:26 PM PST by CutePuppy (If you don't ask the right questions you may not get the right answers)
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To: LucyT

ping


26 posted on 01/29/2010 9:09:18 PM PST by Protect the Bill of Rights
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To: lwd

Russia, China, Paulson. That makes three.


27 posted on 01/29/2010 9:12:17 PM PST by takenoprisoner (Freedom Watch: fight for freedom with everything you have.)
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To: April Lexington

Of course they could still do it now. I just hope that KNow matter what happens it leads to a better day with all good.


28 posted on 01/29/2010 9:13:51 PM PST by TBall
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To: April Lexington

Because it’s a flat-out lie. Paulson announced at a secret meeting in Manhattan they would NOT back Lehman when it was too late for Lehman to regroup which was the first domino. Later, they allowed Barclay’s to cherry pick Lehman’s assets. They knew exactly what they were doing.


29 posted on 01/29/2010 11:18:40 PM PST by MestaMachine (http://www.freerepublic.com/focus/f-news/2426869/posts SUPPORT RINO FREE AMERICA)
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To: lwd

bttt


30 posted on 01/30/2010 2:58:59 PM PST by Tailgunner Joe
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To: Thunder90

Here’s some food for thought. I’m curious about your take. FRegards ....


31 posted on 04/10/2010 1:22:52 PM PDT by Arthur Wildfire! March (Weakening McCain strengthens our borders, weakens guest worker aka amnesty)
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