September 7, 2008 (LPAC)--Economist and statesman Lyndon LaRouche has denounced U.S. Treasury Secretary Hank Paulson's `unlimited' bank bailout announcement today, as "tantamount to treason" against the United States and its Constitution. Paulson's action completely confirms the warning of the Lyndon LaRouche Political Action Committee--ever since authorization of this Federal bailout action was demanded by Paulson in July--that the Treasury is not assisting Fannie Mae or Freddie Mac; it is using them to pass through a huge new taxpayer bailout to international banks holding Fannie and Freddie and other mortgage securities. These banks are being aided by the Treasury in postponing the inevitable write-off of trillions in worthless securities, which would expose their bankruptcy. The bailout will not work, except to worsen the ongoing financial crash.

Paulson announced at 11:00 a.m. the government takeover of Fannie Mae and Freddie Mac until the end of 2009, and the "unlimited" bailout by the Treasury of Fannie and Freddie securities held by banks.

Both Republican John McCain and Democrat Barack Obama announced they backed the bailout.

Paulson refused to name a figure for the bailout over any time period: Both the new capital being put into Fannie and Freddie by the Treasury, and the Treasury "Secured Credit Lending Facility" opened up to them, are open-ended and unlimited (except by the current U.S. Federal debt ceiling). Worse, Paulson announced that the Treasury is mandating the two government-sponsored enterprises to use this Federal credit line to buy more, riskier toxic mortgage-backed securities (MBS), and more subprime and undocumented mortgages, through the end of 2009, than they have been buying in 2008.

Worse still, Paulson announced the Treasury itself will start buying MBS directly from Fannie and Freddie, whether issued by them or bought by them from investment banks.

A more transparent bailout of $2 trillion of Fannie and Freddie MBS held by banks and financial funds, and of lenders of mortgages guaranteed by Fannie and Freddie, could not have been proclaimed. Paulson's announcement even extends the "secured lending credit facility" to the Federal Home Loan Banks as well, although no one had reported them to be "in crisis" like Fannie and Freddie; some of the Home Loan Banks have been throwing huge bailout loans at bankrupt subprime mortgage lenders like Countrywide Financial.