 No plan to inject cash: Paulson
(China Daily)
Updated: 2008-08-12 08:15 US Treasury Secretary Henry Paulson said there are no plans to inject capital into Fannie Mae and Freddie Mac after the two mortgage companies posted combined losses of $3.12 billion last week. "We have no plans to insert money into either of those two institutions," Paulson said in an interview with NBC's "Meet the Press" broadcast on Sunday in Beijing. He added that their results were "not a surprise" and that the housing slump will last beyond this year. Paulson last month brokered a plan to bolster the two government-sponsored enterprises that includes giving Treasury the right to buy their shares. Fannie and Freddie, which account for almost half of the $12 trillion mortgage market, reported losses three times wider than estimated, prompting some investors to predict that Paulson will be forced to act. "Given that Fannie Mae and Freddie Mac are solely involved in housing, that's their sole business, and given the magnitude of the housing correction we've had, it's not a surprise to me to see those losses," Paulson said. Paulson, the former chairman of Goldman Sachs Group Inc, said he won't serve as Treasury secretary under the next president, regardless of who is elected in November. "I'm going to run right up until the end," said Paulson, 62, who joined the Bush administration in July 2006, succeeding John Snow. "I will do everything I can to make for a smooth transition, to work closely with my successor here in Treasury." Biggest threat Paulson said Freddie and Fannie's financial problems underscored his view that the housing crisis remains the biggest threat to the US economy. The worst housing slump since the Depression won't end quickly, he said. "We have got some serious issues that we're dealing with in our economy," he said. "I believe it's going to take us well beyond the end of the year to work through all the housing problems." Home prices in 20 US metropolitan areas fell in May by 15.8 percent from a year earlier, the most on record, the S&P/Case-Shiller home-price index showed on July 29. Foreclosure filings in the second quarter jumped 121 percent from a year earlier, RealtyTrac Inc said last month. Acknowledging that the housing and credit crises have been "humbling," Paulson said it was important to reassure investors around the world that the US is addressing its problems. "The period of turmoil that we're going through in our capital markets today is different from some of the periods we've had in the past, in that the root cause took place right in the US," he said. Agencies (China Daily 08/12/2008 page20) |
