Sunday, July 13, 2008

The problems of Fannie & Freddie

The Bush administration yesterday increased the pressure on Fannie Mae and Freddie Mac to curtail their growth, announcing Cabinet-level studies of the companies' holdings and whether they can be reined in using existing law and regulatory powers.

Legislation to slow the companies' growth and narrow their activities began moving through Congress last year in response to multibillion-dollar accounting scandals, but it is stalled in the Senate.

Multibillion dollar accounting scandals at Fannie/Freddie? No! It can't be true!

The story continues:

Yesterday, Housing and Urban Development Secretary Alphonso Jackson said his agency would study whether billions of dollars in assets and liabilities are being held by the two companies in violation of their government charters.

And the date of this story:

June 14, 2006

Washington Post, by Annys Shin

And one last interesting comment in the article:

The Treasury and HUD actions come as legislation to tighten oversight of the two companies remains bogged down in the Senate. Lawmakers have not been able to agree on whether to force the companies to shrink their investment portfolios, which played a major role in the accounting problems.

"Remains bogged down in the Senate." Interesting. I'm pretty sure that's codeword for one or more Senators were actively blocking increased oversight. Anyone have any idea who it was? I have no idea.

Anyway, I'm not an economist. And I don't have deep knowledge of this whole banking debacle. But I can read. And this article makes it clear that people knew of this Fannie/Freddie mess more than two years ago.

And today we hear reports of another massive bailout... this one for Fannie Mae & Freddie Mac.

Is anyone going to be held responsible? Doubt it.

Noting though that a Fannie/Freddie scandal started more than two years ago... we're now at the point that inadequate oversight cannot be pinned on the former Republican Rubber Stamp Congress. Rather, Speaker Pelosi and Sen. Reid take the blame for this... along with the President and his administration.

Furthermore, while he sits on the House Financial Services Committee, I don't think it's really fair to point the finger (exclusively) at Congressman Chris Murphy. But at this point... (particularly after I heard Obama flip-flopped on warrantless wiretaps), I say throw the bums out.

Yeah... at this point I'd be happier to see an entirely new Congress. Throw them out. Throw them all out... well, except of course for the one guy who at least recognizes the root of so many of our problems (flawed monetary and fiscal policies and a flagrant disregard for the Constitution). By the way, that's not to say that Ron Paul is correct about everything... far from it. But at least he recognizes we've got problems and is willing to offer ideas for improvements.

Tim White

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