Fannie and Freddie: No Strings Attached

[babylonsister]

http://talkingpointsmemo.com/archives/203899.php

No Strings Attached

Dean Baker: "We had to keep Fannie and Freddie in business, but we could have done this by putting conditions on the bailout. The government uses conditions all the time when it offers help to low and moderate income people. ... It is only when it comes to giving money to extremely rich people that we find it impossible to impose conditions."

--David Kurtz

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http://tpmcafe.talkingpointsmemo.com/2008/07/13/bush_and_congress_want_to_rais/


Bush and Congress Want to Raise Your Taxes to Help out Fannie and Freddie's Management and Shareholders
By Dean Baker - July 13, 2008, 11:27PM

snip//

We should all be thankful that the government intervened. After all really rich people and investment fund managers can't be expected to be able to handle their investments on their own. They need the helping hand of the government when they really screw up.

Similarly, we don't want the fate of highly paid executives to be left to market. If this happened, some might lose their vacation homes and private jets.

Some people say that we had to hand tens of billions of dollars to the country's richest people to prevent a financial collapse. This is simply not true.

We had to keep Fannie and Freddie in business, but we could have done this by putting conditions on the bailout. The government uses conditions all the time when it offers help to low and moderate income people. Unemployment insurance, TANF, food stamps, and even student loans come with all sorts of conditions.

It is only when it comes to giving money to extremely rich people that we find it impossible to impose conditions. Again, we could have told Fannie and Freddie that no executives will get more than $2 million a year in total compensation. We could have told their shareholders that they are out of luck, because that is what is supposed to happen when you invest in a bankrupt company.

Instead, we told the people who work as truck drivers, school teachers, and fire fighters that they will have to pay more in taxes to help some of the richest people in the country escape the consequences of their own stupidity. While kicking the poor is always fun for politicians, neither the Bush administration nor Congress are prepared to tell the very rich that they are on their own.

[gatorboy]

1. I can't wait to see THEIR stimulus check.

[harun]

3. They said the other day how much these two companies hold in mortgage

debt it was like 1.4 trillion dollars. I almost fell out of my chair.

(Note, that isn't how much the companies are in debt just the value of the mortgages they own)

I guess this is about 1/2 of the mortgage debt of the U.S. So this mean Americans are in debt about 3 trillion dollars over the home loans. This is a huge problem. That our government doesn't see this is an even bigger problem.

[soothsayer]

7. They hold $5 trillion; total mortgage debt is $12 trillion

[harun]

9. Wow, what a recipe for disaster (n/t)

[harun]

2. Why do they get to bail out these companies with our tax dollars

with no input from us whatsoever?

[dysfunctional press]

5. because they are our "chosen" representatives.

what they do, they do in our names.

[harun]

6. Our financial systems will continue to get more and more corrupt

with every bail out. We are basically putting up a huge sign that says "Be as greedy and corrupt as you possibly can, the tax payers will bail you out if anything goes wrong".

[dysfunctional press]

8. privatize the profit, but socialize the risk...it's the american business model.

it truly sucks- but as long as they can con the people, it's going to continue. is it any wonder that they've been dumbing down the american educational system- a stupid populous is easier to take advantage of.

[dysfunctional press]

4. NOTHING is going to change until we the people start building guillotines on the capitol mall.

heads need to tumble down BOTH sides of the aisle.

[Tierra_y_Libertad]

10. It's nice of them to bail out the Chinese, Japanese,etc holders of the bonds.

"The capitalists will sell us the rope with which we will hang them." V.I. Lenin

I find the irony delicious.

http://www.marketwatch.com/news/story/chinese-governmen...


WASHINGTON, Jul 11, 2008 (BUSINESS WIRE) -- As politicians call for taxpayer bailouts and a government takeover of troubled mortgage lenders Freddie Mac and Fannie Mae, FreedomWorks would like to point out that a bailout is a transfer of possibly hundreds of billions of U.S. tax dollars to sophisticated investors and governments overseas.

The top five foreign holders of Freddie and Fannie long-term debt are China, Japan, the Cayman Islands, Luxembourg, and Belgium. In total foreign investors hold over $1.3 trillion in these agency bonds, according to the U.S. Treasury's most recent "Report on Foreign Portfolio Holdings of U.S. Securities."

FreedomWorks President Matt Kibbe commented, "The prospectus for every GSE bond clearly states that it is not backed by the United States government. That's why investors holding agency bonds already receive a significant risk premium over Treasuries."

"A bailout at this stage would be the worst possible outcome for American taxpayers and mortgage holders, who have been paying a risk premium to these foreign investors. It would change the rules of the game retroactively and would directly subsidize the risks taken by sophisticated foreign investors."

"A bailout of GSE bondholders would be perhaps the greatest taxpayer rip-off in American history. It is bad economics and you can be sure it is terrible politics."

[kentuck]

11. Socialism for the rich only...

Everybody else, screw you!

[spanone]

12. so we, the taxpayers, should expect to receive our stock portfolios anyday, correct?

we now own this company, correct?