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Barney Frank: Fannie and Freddie now a 'public policy instrument'
Mortgage giants Fannie Mae and Freddie Mac are now basically a "public policy instrument" of the government, Rep. Barney Frank (D-Mass.) suggested Tuesday. Frank, the chairman of the House Financial Services Committee, asserted that the companies, which were taken over by the U.S. in September 2008, have become an extension of the government's policy-making tools.
"Remember now that Fannie and Freddie have been converted," Frank said during an appearance on CNBC. "Part of the losses of Fannie and Freddie are that since the housing collapse, Fannie Mae and Freddie Mac have become a kind of public utility."
Frank made that claim in response to reports that the government may lose as much as $400 billion from its conservatorship of Fannie and Freddie, assistance that was made available when the home loan companies were put on the brink of collapse due to the subprime mortgage crisis.
The Financial Services chairman defended those losses, saying they were incurred in part due to a conscious decision by the government to use the companies to extend assistance to homeowners with underwater mortgages.
"They're not what they used to be -- that inappropriately hybrid, private stock company, public policy instrument," Frank said. "They have become the public utility that finances housing in America to a great extent. Part of the loss is a public policy decision that it would be worse to not have some support for the housing market."
The companies, which were initially chartered by the U.S. government, had previously operated as private entities.
One could argue that Mussolini's definition of fascism ('everything inside the state, nothing outside the state') is operative here. But the reality is more that of the Russian mob -- grab everything that isn't nailed down; if it nailed down, get a crowbar, pry it loose, then grab it.
What Barney Frank is acknowledging is that Fannie and Freddie are now a playground for 'policy', while the directors make their multi-million dollar salaries, the friends of policymakers and directors get their special access, and the taxpayers get, well, nothing useful. "Support" for the housing market translates to "support" for the friends of Barney Frank. That is the new policy, see if it isn't over the next few years.
I almost find myself agreeing with the progressive left on this one: what we are seeing is a monetizing of the bank losses in the mortgage securities markets the last two years with the taxpayers holding the bag. The banks get their money back, the elites get to keep playing the New York-to-Washington-and-back game, the apparatchiks get their deals and favors, and the working and middle classes get higher taxes and mounting deficits.
Such a deal.
George Bush didn't do us any favors with the pell-mell rush to 'save' the financial system in September, 2008. I understand what the dangers were and I understand the need to do something, but he helped kick open a door that Obama, Geithner, Frank, Gorelick and many others are now going through in their plans to 'transform' America -- into, essentially, a kleptocracy.
This, by the way, is the essence of the David Brooks article that the conservative side was scorning elsewhere this week. Brooks is right about one key point: it is indeed the 'educated', the elites, that have caused a lot of problems, and it's the unwashed who are realizing it.
Not sure how we'll fight the war on terror and fight for freedom when the current bunch is done. |
Posted by: Steve White 2010-01-06 |
