Senators Grill Paulson, Bernanke

Posted July 15, 2008 at 1:44pm

The grilling of top economic officials before Senators stirred a little bit of controversy Tuesday afternoon as Sen. Chuck Hagel (R-Neb.) tried to get Treasury Secretary Henry Paulson to slam the leaders of Freddie Mac and Fannie Mae for their huge compensation packages during the housing downturn.

Paulson replied that he “was not looking for scapegoats, but looking to get something done.”

Hagel, in turn, said he too was not looking for “scapegoats,” but suggested that the two quasi-government entities need to be held accountable.

The exchange became even more impassioned when Sen. Jim Bunning (R-Ky.) animatedly said during his questioning of the officials, “You’re not going to be here in January. I’m still going to be here.”

Bunning pledged to do everything he could to stop the Bush administration plan to bolster Fannie and Freddie, which lawmakers hope to act on later this week.

Otherwise, there have been precious few political fireworks as Paulson, Federal Reserve Chairman Ben Bernanke and Securities and Exchange Commissioner Chris Cox testified before the Senate, Banking, Housing and Urban Affairs Committee on Tuesday.

Earlier, Chairman Chris Dodd (D-Conn.) questioned Paulson on why Congress needs to approve the ability of financial institutions to tap into extra credit in order to shore up more capital.

After Paulson appeared to dodge the question, Dodd then posed it Bernanke, who said he believed that the Treasury does have the power to give the banks extra credit, but would need to further examine the regulatory rules.

Dodd described the tense economic atmosphere as needing some sort of steadiness, saying that Congress will work “expeditiously” to respond to the housing crisis, but that there is no need to become anxious.