Politics, shaky economy create no rush to restructure Fannie and Freddie
By Zachary A. Goldfarb
Washington Post Staff Writer
Thursday, March 11, 2010
The federal government has spent the past half year seeking to roll back its emergency efforts at propping up the financial markets -- with the notable exception of its involvement in mortgage giants Fannie Mae and Freddie Mac.
As the government has pledged more and more money to cover the companies' losses, it has assured the public that planning was underway for overhauling the firms so the bailouts would end. As recently as December, the Obama administration said it expected to release a preliminary report on how to remake Fannie Mae and Freddie Mac around Feb. 1.
But no plan was produced, and in response to questions from lawmakers, Treasury Secretary Timothy F. Geithner clarified last month that it would be another year before the government proposes how to restructure the firms.
Sixteen months after they were seized to prevent their collapse, the companies remain wards of the state, running a tab that has now exceeded $125 billion in what has become the single costliest component of the federal bailout for the financial system.
(More here.)
Washington Post Staff Writer
Thursday, March 11, 2010
The federal government has spent the past half year seeking to roll back its emergency efforts at propping up the financial markets -- with the notable exception of its involvement in mortgage giants Fannie Mae and Freddie Mac.
As the government has pledged more and more money to cover the companies' losses, it has assured the public that planning was underway for overhauling the firms so the bailouts would end. As recently as December, the Obama administration said it expected to release a preliminary report on how to remake Fannie Mae and Freddie Mac around Feb. 1.
But no plan was produced, and in response to questions from lawmakers, Treasury Secretary Timothy F. Geithner clarified last month that it would be another year before the government proposes how to restructure the firms.
Sixteen months after they were seized to prevent their collapse, the companies remain wards of the state, running a tab that has now exceeded $125 billion in what has become the single costliest component of the federal bailout for the financial system.
(More here.)
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2 Comments:
The only legitimate restructing for Freddie and Fannie is to pay off their debts and then shut them down so the taxpayers are no longer on the hook for risky mortgages in their portfolios. If that means some poor person or underdeseving person can't get a mortgage, well, tough sh%t in my opinion. We are so hell bent on collectivizing the economy and privatizing the profits and socializing the debts, we are on a path to destruction of our economy. we are so overleveraged with public debt that even a massive supply side tax cut won't be able to ramp up production in order to grow out of these deficits and paying off these debts. the CBO says by 2020, the debt will be nearly 100% of our national income. You cannot spend your way in to prosperity because of opportunity costs - for every dollar you spend in the public sector, that's more than a dollar that is diverted from private sector when it comes to productivity - or productivity equivalents - which prevents you from legitimately servicing your debt. That means either massive tax increases which will kill any recovery or the Federal Reserve will have to print money or massively increase interest rates so people will lend the government money.
This administration is putting our economy on the path to destruction and they will leave this problem for the next president and a future congress to clean up. That means the sooner we can be rid of Obama, the better. 2012 cannot come soon enough to rescue our economy so we can be rid of the adolescent in office who has zero, zip, nada a clue on how to fix the problems in our economy.
The article points out an important but ignored area of Barney Frank's (and otehr progressives) missdeeds. Some have called for the reining on of Freddie and Fannie for years only to be shouted down as cruel and heartless and greedy. Many progressives point to Canada when it comes to health care, I wish progressives would take a lesson from Canada when it comes to housing - much less government involvement, higher down payment requirements and guess what, similar percent home ownership. Why are taxpayers considered greedy when they want to keep more of their money but the progressives are never greedy for wanting more and more?
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