The plot to use Freddie and Fannie to steal billions from taxpayers.

[pa28]

Ever since Fannie Mae and Freddie Mac went bust necessitating a federal takeover and about $190 billion in bailout money to cover their debts, plans have abounded about how to best fix the mortgage finance system in the United States. There are plans from the left and plans from the right and many many plans from the center.

And then there is a plan from four hedge fund managers — Bill Ackman, Bruce Berkowitz, John Paulson, and Richard Perry — who think the right solution is for the government to hand them tens of billions of dollars for no good reason at all. It's a plan so shocking that the fact that it's even receiving any consideration at all is a testament to the extent to which our republic is becoming a corrupt oligarchy. And the longer the question of what to do with Fannie and Freddie remains unresolved the higher the risk that they will somehow manage to get their way.

What this says is that in the current scenario where the Treasury gets the money, the Treasury is also left bearing the risk in case Fannie and Freddie fall on hard times. By contrast, if we shift to the right hand scenario where we hand the money over to the hedge funds as "starting capital," the hedge funds bear the risk.

This is as if I tried to persuade you that your current retirement fund is too risky, so you should just hand the money over to me. Once you have no money there's no more risk of loss!

http://www.vox.com/2014/5/17/5724092/the-plot-to-use-fannie-mae-and-freddie-mac-to-steal-billions-from-the

Bill Ackman believes his political leverage can move policy makers to hand him tens of billions of public assets for nothing. After recently "convincing" the FTC to investigate a company he had a massive short position on I think he may be right.

[merrily]

1. Profits for the private sector, losses for the pubic sector, then wail that

the public sector never does anything right.

Coming soon to a post office near you.

FTC investigation. Um, okay.

[pa28]

2. The administration wants to privatize Freddy and Fannie.

The details are vague at this point but it looks like they want fair compensation for public assets.

The hedge fund plan is a naked grab for cash and the fact it's authors believe it can happen is either hubris on their part or a warning to us about who really runs the place.

[merrily]

3. Sure. When does the public NOT get full ad fair compensation for public assets?