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Paulson Says Russia Urged China to Dump Fannie, Freddie Bonds
Posted By admin On January 29, 2010 @ 12:23 pm In Money Watch | Comments Disabled
Michael McKee and Alex Nicholson
Bloomberg News 
Friday, January 29, 2010
Jan. 29 (Bloomberg) — Russia urged China to dump its Fannie Mae and Freddie Mac bonds in 2008 in a bid to force a bailout of the largest U.S. mortgage-finance companies, former Treasury Secretary Henry Paulson said.
Paulson learned of the “disruptive scheme” while attending the Beijing Summer Olympics, according to his memoir, “On The Brink.”
The Russians made a “top-level approach” to the Chinese “that together they might sell big chunks of their GSE holdings to force the U.S. to use its emergency authorities to prop up these companies,” Paulson said, referring to the acronym for government sponsored entities. The Chinese declined, he said.
(ARTICLE CONTINUES BELOW)
Russia’s five-day war with U.S. ally Georgia started on Aug. 8, the same day as the opening ceremonies of the Beijing Games. Prime Minister Vladimir Putin told U.S. President George W. Bush during those ceremonies that “war has started,” according to Dmitry Peskov, Putin’s spokesman.
“The report was deeply troubling — heavy selling could create a sudden loss of confidence in the GSEs and shake the capital markets,” Paulson wrote. “I waited till I was back home and in a secure environment to inform the president.”
Russia never approached China about dumping U.S. bonds, Peskov said today. “This is not the case,” he said by phone.
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URLs in this post:
 Bloomberg News: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=afbSjYv3v814
 Image: http://www.prisonplanet.tv
 Hank Paulson Wants To Fix Fannie And Freddie By… Recreating Fannie And Freddie: http://www.prisonplanet.com/50651.html
 Fannie, Freddie Slump on Concern Treasury Bailout Is Inevitable: http://www.prisonplanet.com/fannie-freddie-slump-on-concern-treasury-bailout-is-inevitable.html
 China sells US bonds to ‘show concern’: http://www.prisonplanet.com/china-sells-us-bonds-to-show-concern.html
 China explores buying $50bn in IMF bonds: http://www.prisonplanet.com/china-explores-buying-50bn-in-imf-bonds.html
 Paulson says banks ready to issue covered bonds: http://www.prisonplanet.com/paulson-says-banks-ready-to-issue-covered-bonds.html
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