Published: July 22, 2008 11:54 am            

Bunning criticizes support for mortgage giants

Louisville — U.S. Sen. Jim Bunning again condemned a support package for troubled mortgage giants Fannie Mae and Freddie Mac, saying the plan backed by the Bush administration "smacks of socialism."

In his weekly conference call Tuesday with reporters from his home state, the Kentucky Republican accused Treasury Secretary Henry Paulson of trying to "ram down his fix on Fannie and Freddie."

Bunning said the plan before Congress is an undue interference in the free market, an argument he also made last week. The plan calls for unlimited government loans to the mortgage giants and would allow the government to purchase stock in the two companies if needed. Paulson has said the proposal is a backup effort that would be in effect for 18 months.

"To me, that smacks of socialism, and I don't want my free markets to be socialized," Bunning said. "... I don't think it works real well, and I don't think the American people want that at all."

Fannie Mae and Freddie Mac guarantee or own almost half of the home mortgages in the country. Paulson has urged Congress to quickly approve the support for Fannie and Freddie amid a period of market turbulence.

Bunning said the plan goes against economic principles he learned as an Xavier University student.

"I was always taught that this was a free-market economy in the United States, not one that was controlled by the government," he said. "And that the government shouldn't insure free-market risk, and that's what we're talking about."

Congress' top budget analyst said Tuesday that a federal rescue of Fannie and Freddie could cost taxpayers as much as $25 billion, but predicted there's a better than 50 percent chance the government won't have to prop up the companies by lending them money or buying stock.

Bunning has also criticized the Federal Reserve's action to back a Bear Stearns rescue package.

As the nation's then-fifth-largest investment bank teetered on the brink of bankruptcy, the Fed agreed to provide backing for up to $30 billion for a deal for JPMorgan to take over the troubled company. Bunning has referred to it as an abuse of the Fed's power that interfered in the free market.

Meanwhile, when asked about energy policy, another pressing issue for Congress amid record high fuel prices, Bunning said Tuesday that billionaire oilman T. Boone Pickens' advocacy for developing a wind energy industry wouldn't be practical in the Bluegrass State.

"In Kentucky, we could put up as many windmills as possible and we don't have enough wind to produce enough energy for one day," Bunning said.

Bunning said solar energy offers a real alternative that should be developed quickly "because the sun is always there." Bunning is a proponent of developing coal-to-liquid fuels, a popular idea in Kentucky — one of the nation's top coal producers. Bunning also touted natural gas as a substitute fuel for automobiles.



Copyright 2008 The Associated Press.

        

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