bush to the rescue

Scramble Led to Rescue Plan on Mortgages
New York Times - 41 minutes ago
By STEPHEN LABATON WASHINGTON -

The Bush administration hastily arranged the dramatic Sunday evening rescue of Fannie Mae and Freddie Mac after Wall Street executives and foreign central bankers told Washington that any further erosion of confidence could have a cascading effect around the world, officials said on Monday.

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By all accounts, Mr. Paulson was the engineer of the rescue package. Only days earlier, he had lost his right-hand adviser on Wall Street issues, Robert Steel, who left as Treasury under secretary, with virtually no notice, to head Wachovia Bank. For their part, Fed officials decided that since the problems in the markets did not reflect a liquidity problem — meaning that Fannie and Freddie had access to plenty of cash — they would take a secondary role to the Treasury.

By the end of the trading day, the companies’ shares had rebounded somewhat, though both had suffered significant declines for the week.