The Birmingham News

Sen. Jeff Sessions takes his bailout concerns to Bush
Says Congress was misled over bailout

Saturday, November 15, 2008
MARY ORNDORFF
News Washington correspondent

WASHINGTON - The Bush administration misled Congress about how it would spend the $700 billion allocated for the financial industry rescue, Sen. Jeff Sessions alleged in a heated letter to the White House on Friday.

The Alabama Republican, who just won a third term, voted against the bailout plan because he argued it was too much government intervention in the economy. But now he's taking that criticism further by challenging the integrity of the official in charge and urging President George W. Bush to intervene.

"It seems to me that (Treasury Secretary Henry Paulson Jr.), whom you obviously admire, has assumed an inappropriate role in our governmental system," Sessions wrote. "He is acting as a Wall Street investment banker, allocating hundreds of billions of dollars in taxpayer money, with no oversight and no state plan. This undermines our heritage of law and order, and is an affront to the principle of separation of powers."
The letter is an unusual burst of criticism from Sessions of the Republican White House with which he has been allied for eight years.

"I believe you have a clear constitutional duty to personally supervise his actions and to direct this process," Sessions told Bush about Paulson. "I urge you to do so."

Sessions singled out Paulson's shift from using the $700 billion to buy troubled mortgage-related assets to investing directly in financial institutions.

"I can only conclude that the swift reversal from purchasing toxic assets to stock purchases was part of a plan to mislead the Congress because massive stock purchases would have received a much more hostile reception," Sessions wrote.

Paulson defended the switch as a necessary adjustment to worsening market conditions since he made the proposal to Capitol Hill in mid-September.

"It was clear to me by the time the bill was signed, on October third, that we needed to act quickly and forcefully, and that purchasing troubled assets, our initial focus, would take some time to implement and would not be sufficient given the severity of the problem," Paulson told reporters earlier this week.

"In consultation with the Federal Reserve, I determined that the most timely, effective step to improve credit market conditions was to strengthen bank balance sheets quickly though direct purchases of equity in banks," Paulson said.

Sessions also asked Bush to publicly outline a plan to extricate the government from the market as soon as possible; to require Treasury to publish basic earnings and loss data on the $700 billion spent; and to oppose expansion of the government bailout program to domestic automakers.

In an interview Friday evening, Sessions said the letter was a sign of his frustration with Republicans' abandoning their conservative principles.

"We mouth the words free enterprise, limited government and private sector but our actions are obliterating those lines right now," Sessions said. "I know this was a scary time but I suspect history will tell us that there were other governmental actions that could have been taken that could have been less damaging to fundamental American principles of free enterprise."

Sessions stopped short of asking Bush to fire Paulson.

"But if he's not capable of being supervised and can't articulate a legitimate path for a future consistent with extricating ourselves from the private sector, then he ought to resign," Sessions said.

E-mail: morndorff@ bhamnews.com

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