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[marketmaven]

Paulson: Russia tried to exacerbate US financial crisis

By Stephen C. Webster
Saturday, January 30th, 2010

henrypaulsontreasury2 Paulson: Russia tried to exacerbate US financial crisis. Russian interests attempted to force the U.S. government bailout of Fannie Mae and Freddie Mac by selling off its holdings in the two entities in 2008, then urging China to do the same, according to former U.S. Treasury Secretary Henry Paulson.

Paulson's claim is carried by his forthcoming memoir, “On The Brink.” An early copy was obtained by Bloomberg News.

"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," Bloomberg reported. "The Chinese declined, he said."

He reportedly added that he waited until returning to the U.S. before informing former President George W. Bush of what he called a "disruptive plan."

The New York Post called it flirting with "financial war."