Paulson ties Russia to Fannie-Freddie plot

WASHINGTON, Conn., Jan. 29 (UPI) -- Russia asked China to join it in selling holdings in Fannie Mae and Freddie Mac to force an emergency U.S. bailout, former Treasury Secretary Hank Paulson says.

In his memoir, "On the Brink," Paulson says he learned of the plan while attending the Olympics in Beijing in August 2008, The Financial Times reported Friday. The book suggests Russia approached the Chinese after the Aug. 8 start of the war between Russia and Georgia, an ally of the United States.

"Russian officials had made a top-level approach to the Chinese, suggesting that together they might sell big chunks of their GSE (government-sponsored enterprise) holdings to force the United States to use its emergency authorities to prop up these companies," the book said.

Paulson says he found that "deeply troubling," even though Chinese officials refused to participate, the newspaper said. A senior Russian official had no comment on Paulson's claim.

The memoir, in a separate allegation, says British Chancellor Alistair Darling stopped Barclays Bank from going through with a proposed rescue takeover of Lehman Brothers. The memoir says the chancellor would not support special treatment by U.K. regulators.

Paulson wrote that he got a call from Darling Sept. 12 when authorities were seeking a buyer for Lehman. Darling said he had concerns about a deal with Barclays because he worried it could harm the British bank, Paulson says.

Two days later, Paulson said, he learned the merger failed to get necessary approvals from the U.K. Financial Services Authority.