Your Cash for Crooks

          Fannie Mae and Freddie Mac helped create the mortgage bubble that burst in 2007.  When that happened, elected officials pledged your money to provide the semi-private mortgage agencies with an unlimited line of credit.  They have used about $141 billion so far.  Estimates are that taxpayers will pay over $200 billion to bail them out.  Even though they are losing money like a drunk in Vegas, the two companies decided to pay $13 million in bonuses.  Since they are insolvent, Freddie and Fannie used your money to pay those bonuses.       

          Just today, Reuters reported that Freddie Mac has already received $72.2 billion in taxpayer funds and has asked for additional money from the government so that they can make a $1.6 billion dividend payment to the federal treasury.  I sure wish I could do that.  Hey, mortgage company, give me a thousand dollars so I can pay my mortgage to you—oh, and give me more for my annual bonus. 

          Freddie Mac and Fannie Mae buy mortgages from banks and repackage them as securities which they sell to investors.  Beyond that, they guarantee the underlying value of the mortgage security and that is the problem.  When the housing bubble burst, Freddie and Fannie were on the hook for the lost principal.  As the Reuters story states, “Given the crucial role the two play in the U.S. housing finance system, owning or guaranteeing about half of all mortgages, the U.S. Treasury has seen them as too important to fail.”  In a capitalist free enterprise system, failure should always be an option.   

          While the Obama administration seems willing to pour endless taxpayer dollars down the black holes of Fannie Mae and Freddie Mac they seem total unwilling to take responsibility for bad management.  Press Secretary, Jay Carney, said, “These organizations, these entities are independent, and therefore they are independent decisions. The White House is not involved and nor should it be.”  The Washington Times recently stated, “Their over paid executives are being supported, aided, and abetted by the government.” 

          It is our money that Fannie and Freddie and squandering.  If the President doesn’t think it is his job to be involved then we do indeed need a new president.  

Comments

[Cry, Beloved Country]

>>In a capitalist free enterprise system, failure should always be an option.

Yes! I think our increasing refusal to allow anyone to fail is a theological problem at root. The Founders and those who followed them repeatedly expressed a deep reliance on the Providence of God, or Divine Providence or, simply, Providence. They weren't so naive as to think this meant that bad things never happen. They realized that God often does not provide what (or when) we want. (And that's often very scary. --But if he did, that would mean he had the same view of things I did, and thus was no bigger or wiser than me, and that would be even scarier!)

Our culture has ditched that trust in Providence, but quickly seen that life is waaay too scary to negotiate without a provider, so for the last seventy years or so, we've been trying to prop the government up in that position. Now we're seeing that in some ways the government isn't even as wise as we are--and that may be the scariest thing yet. --Or it would be, without what Lincoln called a firm reliance on Divine Providence.