Fannie and Freddie Amnesia



by Publius

Peter Wallison

Wall Street Journal:

Taxpayers are on the hook for about $400 billion, partly because Sen. Obama helped to block reform.

The hypocrisy of the current administration continually blaming Wall Street Bankers and “greedy saving and loan companies” is just absolutely astounding.  They must take us for the utter fools that elected President Obama in the first place.  We must never forget, progressive administrations started the GSE’s, when questioned by congress in 2005 the socialists lied under oath. It’s all a shell game and they think we will never find the pea. Game over in November you will no longer attempt to rule us. Random thoughts while observing the passing charade, I’m J.C.

The Congressional Budget Office has estimated that, in the wake of the housing bubble and the unprecedented deflation in housing values that resulted, the government’s cost to bail out Fannie and Freddie will eventually reach $381 billion. That estimate may be too optimistic.

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Last Christmas Eve, Treasury removed the $400 billion cap on what the government might be required to invest in these two GSEs in the future, and this may tell the real story about the cost to taxpayers. In typical Washington fashion, everyone has amnesia about how this disaster occurred.

The story is all too familiar. Politicians in positions of authority today had an opportunity to prevent this fiasco but did nothing. Now—in the name of the taxpayers—they want more power, but they have never been called to account for their earlier failings.

One chapter in this story took place in July 2005, when the Senate Banking Committee, then controlled by the Republicans, adopted tough regulatory legislation for the GSEs on a party-line vote—all Republicans in favor, all Democrats opposed. The bill would have established a new regulator for Fannie and Freddie and given it authority to ensure that they maintained adequate capital, properly managed their interest rate risk, had adequate liquidity and reserves, and controlled their asset and investment portfolio growth.

These authorities were necessary to control the GSEs’ risk-taking, but opposition by Fannie and Freddie—then the most politically powerful firms in the country—had consistently prevented reform.

The date of the Senate Banking Committee’s action is important. It was in 2005 that the GSEs—which had been acquiring increasing numbers of subprime and Alt-A loans for many years in order to meet their HUD-imposed affordable housing requirements—accelerated the purchases that led to their 2008 insolvency. If legislation along the lines of the Senate committee’s bill had been enacted in that year, many if not all the losses that Fannie and Freddie have suffered, and will suffer in the future, might have been avoided.

Why was there no action in the full Senate? As most Americans know today, it takes 60 votes to cut off debate in the Senate, and the Republicans had only 55. To close debate and proceed to the enactment of the committee-passed bill, the Republicans needed five Democrats to vote with them. But in a 45 member Democratic caucus that included Barack Obama and the current Senate Banking Chairman Christopher Dodd (D., Conn.), these votes could not be found.

Continue reading the article here. The government lives in an alternative universe. The more it screws up, the more power it gets to vote itself.

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4 responses to “Fannie and Freddie Amnesia

  1. Great Job Jim! Yes this is the biggest financial Scam perpetrated upon the citizens of the USA. Barney Frank, Maxine Waters and the other Democrats were blocking all efforts by Republicans to prevent the Fannie and Freddie Mortgage Crisis from happening. This Video shows who caused the Fannie and Freddie crisis very clearly. The Democrats are clearly to blame as seen here>>

    • You got it my friend. It’s time for the voters to rage in November. Need to have you teach me how to post a you tube in the comment section. When I post them the just look like links. Appreciate your help. Jim

  2. Fannie and Freddie will never be investigated or taken to task until we put conservative representatives that respect the principles of the Constitution.
    Taking out Fannie and Freddie will be a monumental effort, they own 50% of the mortgages.
    Maxine Waters, Barney Frank, Chris Dodd. and the trails they have left behind them would be in court for years !
    GW Bush and McCain tried to stop the mortgage debacle.
    They were denied by the congressional members who I think will benefit from the payoffs for the rest of their lives.

    Carter started the ‘community reorganization act’, Clinton boosted it and during Bushs’ 2nd term the libs denied the fact that anything was wrong with these agencies, floored the movement toward ‘everybody should be able to afford a house’.

    There is a long road ahead my friends.

    Washicago is alive and in control.

    • AFVET is there anything you don’t know, you are a walking encyclopedia, and as usual spot on the money. Think how different the world would be today if the Republicans had any juevos and really pushed at those hearing and smacked the liars above back with a full scale FBI investigation. Lot’s of them would certainly been indicted and eventually found guilty. Current the mechanism de jur is the “House and Senate Ethics Committee”, An oxymoron to be sure, how do people with no ethics, judge themselves?
      The most recent example being Dodd, Frank, Waters, and other miscreants being brought up on charges, only to have them dropped because members of this August group have a “different” set of ethical standards they are to follow. Say WTF over? Personally I would have felt better and would have found the finding that there are no whores in the whorehouse more credible, but that just me and Bobbie McGee.

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