Last weekend Henry Paulson the Treasury Secretary appointed by Bush and the former head of the Goldman Sachs investment house announced that Bush /Cheney would ask congress to bail out Fannie Mae and Freddie Mac. Now I know this sounds like a simple case of getting 2 hookers out of jail but no Fannie and Freddie were founded as a government agency in 1938 as part of FDR's New Deal to provide ready cash to the mortgage market to make loans for home loans.
In 1968, to remove the activity of Fannie Mae from the federal books, it was converted into a privately owned, profit-making housing finance companies that hold or guarantee almost half of the US mortgage loan market.
What Paulson seeks and will ultimately get is an unlimited line of credit i.e.: your tax dollars to guarantee their debt and authority to purchase shares to add to their capital base. Paulson said the new subsidies were designed to sustain the two institutions in their current form.
WTF!!! Socialism for the Rich.
This smells like rotten fish to me. These companies are owned by private stock holders, their CEO's have stuffed their pockets with millions of dollars in lavish salaries and perks to the tune of $18 million for Freddie Mac and $13 million for Fannie Mae this year all the while giving them more incentives to cook the books like Enron so they could take home larger bonuses.
Now the bubble has burst and we must now save the irresponsible and possibly criminal activity of these corporations. They have billions in losses, their shares have plummeted and some say that both would be bankrupt if their assets were marked down to their current market value.
Now the Bush boys want to save America by an explicit federal guarantee and offer taxpayer money to help recapitalize the two banks, more or less nationalizing these companies. The problem is they want to nationalize the freaking loses and give the profits back to the speculators and keep the obscene salaries their CEO's. So, in other words, you and I will pay speculators & CEO's to drive the stock down, let them make bad decisions and then let them pocket millions when their stocks recoup. If we are going to more or less nationalize these guys debt why aren't we nationalizing their assets too? Why am I paying dividends to shareholders when they are playing with our money? Why pay CEO's to lose money? Why allow them to finance the lobbyists to buy votes in congress so that they are shielded from accountability? In Bush World, we the taxpayer has been made the guarantor of not simply the banks that we can regulate, but the hedge funds and investment houses that they have deregulated.We can not let the banking fail but the feds are not demanding tighter regulation on what gambles the speculators can make, how much debt they can take on, and what rewards they can pocket.
Bush and company are committed Socialists for the rich. Just look at Medicare, Bush's pals subsidize private insurance companies to compete with public Medicare. Guess what when they say how government is wasteful and inefficient it turns out Medicare provides healthcare much less expensively, than the private insurance companies.Bush and Tom Delay's Congress pushed the prescription drug bill they included the provision that prohibits Medicare from negotiating cheaper prices for drugs. Guess who profited? I give you a hint it wasn't you or me.
You may ask yourself, why this is allowed to happen?
There are two reasons. The way we finance our elections, and we still have not neutered the K Street lobbyists. The Fannie Mae and Freddie Mac have kept themselves free from pesky regulators and congressional prying by surrounding themselves with a huge stable of lobbyists including former members of congress from the revolving door of the house to K Street. In 2006 Freddie Mac paid a $3.8 million civil penalty to the Federal Election Commission to settle charges that it had used corporate resources to stage 85 fundraising dinners that raised $1.7 million for candidates for federal office. In internal documents, Freddie Mac described the events as an exercise in "political risk management." The fine still stands as the largest in the FEC's 33-year history.
We also know for a fact that Fannie and Freddie have interesting Enronish accouting practices because This past April, former Fannie Mae chief Franklin Raines and two top executives agreed to a $31.4 million settlement with the government over their roles in a 2004 accounting scandal.
Encouraging home ownership is central to sustaining the middle class that makes America great. So it makes perfect sense for the government to subsidize housing mortgages, but why do we need to let crooked under regulated bankers and their investors pocket the money after we the people bail them out. Just call it what it is, Corporate Socialism.
Peace and Liberty through intelligence, strength, and integrity.
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