| Submit your comments on this article |
| Home Front Economy |
| Big Mac: Take taxpayers off hook for rot at Fannie, Freddie |
| 2008-07-25 |
| Americans should be outraged at the latest sweetheart deal in Washington. Congress will put U.S. taxpayers on the hook for potentially hundreds of billions of dollars to bail out Fannie Mae and Freddie Mac. It's a tribute to what these two institutions — which most Americans have never heard of — have bought with more than $170-million worth of lobbyists in the past decade. With combined obligations of roughly $5-trillion, the rapid failure of Fannie and Freddie would be a threat to mortgage markets and financial markets as a whole. Because of that threat, I support taking the unfortunate but necessary steps needed to keep the financial troubles at these two companies from further squeezing American families. But let us not forget that the threat that Fannie Mae and Freddie Mac pose to financial markets is a tribute to crony capitalism that reflects the power of the Washington establishment. What should be done? We are stuck with the reality that they have grown so large that we must support Fannie Mae and Freddie Mac through the current rough spell. But if a dime of taxpayer money ends up being directly invested, the management and the board should immediately be replaced, multimillion dollar salaries should be cut, and bonuses and other compensation should be eliminated. They should cease all lobbying activities and drop all payments to outside lobbyists. And taxpayers should be first in line for any repayments. Even with those terms, sticking Main Street Americans with Wall Street's bill is a shame on Washington. If elected, I'll continue my crusade for the right reform of the institutions: making them go away. I will get real regulation that limits their ability to borrow, shrinks their size until they are no longer a threat to our economy, and privatizes and eliminates their links to the government. It's time to get America on the right track by creating the jobs that will build a strong foundation under our housing markets. We need to address the high cost of gasoline and other energy sources, and transform health care to be cheaper, higher quality and built around the needs of patients. But most of all, we need to reform Washington and wrest control from the special interests that have created this problem. |
| Posted by:Nimble Spemble |
| #2 This is good election campaign fodder but it's not really correct. We as a nation decided that we wanted people to own homes rather than rent. I think that has been good for us, too, as it has helped us be a more conservative nation. Fannie and Freddie have generally been willing to lend to slightly more questionable purchasers than completely private companies because they have operated with an implied U.S. Government promise of financial backing. They were implementing the overall consensus about homeownership as a beneficial thing, and I see nothing wrong with that. Where it went wrong was that they followed the commercial lenders down the path of business expansion through making loans to unqualified customers. Fannie and Freddie were never as bad as some were, most of whom have gone bankrupt, but they were worse than they should have been. They'll be punished for it. However, the loans on their books that will not eventually be made good in one way or another are a very small number. It is much less than the 2% that are claimed to be in trouble. The likelihood of the taxpayer eating the $25 billion that one reputable source said might be the worst-case scenario cost is very slim. The situation needs some attention, granted, but it's not the major crisis it's being portrayed as. See Thomas Sowell's two articles on "Bankrupt Exploiters" that were published this week. |
| Posted by: Jomock Platypus9662 2008-07-25 21:36 |
| #1 concur. |
| Posted by: Broadhead6 2008-07-25 14:36 |