Abolish Fannie Mae and Freddie Mac; we can't afford them

The Obama administration held yet another style over substance “conference” yesterday, this time to give the appearance of doing something about housing giants Fannie Mae and Freddie Mac. The two behemoth government sponsored enterprises (GSEs) are at the epicenter of America’s financial meltdown.

The two GSEs have further placed taxpayers on the hook for nearly $5 trillion in mortgage guarantees and debt obligations.

And Fannie and Freddie continue to bleed money at an alarming rate.

In early August they requested over $3 billion in additional bailout funds. To date, America’s taxpayers have shelled out a whopping $148.2 billion bailing out the two failed government mortgage enterprises. The Congressional Budget Office (CBO) estimates the bailout could reach as high as $389 billion.

“With the national debt at nearly $14 trillion and unemployment still near 10 percent, the administration has yet to stop the bailouts of Fannie Mae and Freddie Mac,” said House Republican Conference Chairman Mike Pence (R-Ind.). “They would do well to remember that underwriting every bad loan in America is not the answer.”

My take:

It's hand-wringing time again concerning the future of Fannie Mae and Freddie Mac, which, unfortunately for American taxpayers, may actually have a future.

But it's election season, so posturing is in order. A couple of days ago, Barney Frank even suggested that maybe, perhaps, eventually, Fannie and Freddie should be "abolished," a suggestion that has been made here without conditions.

Fannie and Freddie served as consigliere in the subprime housing bubble and bust. Without Fannie and Freddie, neither of those disasters could have happened.

Since the bubble and bust did happen, the rational course would be to abolish Fannie and Freddie, since that would prevent a repeat of the subprime mess.

Trouble is, this is election season, and Fannie and Freddie have served as generous supporters of Democrat congressional campaigns. They also have served as hiring halls for out-of-work Democrats, no small consideration given the likelyhood that the Democrat unemployment rate will rise after the November election.

So why don't Republicans make the extinction of Fannie and Freddie an election issue?

Call Barney Frank's bluff.

Shrink government.

Barney Frank goes for a spin on the high road

Peter Roberson, a former staffer for the House Financial Services Committee, may have thought he was moving up in the world when he became a lobbyist for Intercontinental Exchange. But that's not the way his old boss saw it. In a rare break with the Hill's back-scratching culture, Chairman Barney Frank, D-Mass., criticized his former staffer for taking the new job. And Frank did so in the bluntest possible terms, telling Roberson not to show his face around his former boss's committee.

Were everyone on Capitol Hill to follow Frank's example, it would dramatically change the paradigm of public service as a mere steppingstone to a cushy K Street job. It would jam up Washington's revolving door, by which public officials do favors for rent-seeking companies and industries, which later reward them with highly lucrative lobbying gigs. Every year, hundreds of staffers pass through this door, often with their bosses' approval and encouragement, and sometimes to join former bosses who've previously done so. They use their access on behalf of their new employers, while raising industry money for their old patrons.

It's a system that works for everyone involved -- everyone except the taxpayers and consumers who pay for it all. Thus, it was no surprise last summer when theWashington Post reported more than 350 former staffers and members of Congress had been hired to lobby on Obamacare. When the bill passed through the Senate Finance Committee chaired by Sen. Max Baucus, D-Mont., the biggest special interests in the health care field were represented at the bargaining table by two former Baucus chiefs of staff.

At boisterous Town Hall meeting, banking queen Barney Frank poses as an angry white male

The bad guys are the ones with the whistles

"We are not yet a banana republic, though that is the direction in which some of our politicians are taking us-- especially those politicians who make a lot of noise about "compassion" and "social justice."

What makes this all the more painfully ironic is that it is precisely those members of Congress who have had the most to do with creating the risks that led to the current economic crisis who are making the most noise against others, and summoning people before their committee to be browbeaten and humiliated on nationwide television."

http://townhall.com/columnists/ThomasSowell/2009/03/24/cheap_political_theater

The banking queen keeps on giving

"Troubled OneUnited Bank in Boston didn't look much like a candidate for aid from the Treasury Department's bank bailout fund last fall.

The Treasury had said it would give money only to healthy banks, to jump-start lending. But OneUnited had seen most of its capital evaporate. Moreover, it was under attack from its regulators for allegations of poor lending practices and executive-pay abuses, including owning a Porsche for its executives' use.

Nonetheless, in December OneUnited got a $12 million injection from the Treasury's Troubled Asset Relief Program, or TARP. One apparent factor: the intercession of Rep. Barney Frank, the powerful head of the House Financial Services Committee.

Mr. Frank, by his own account, wrote into the TARP bill a provision specifically aimed at helping this particular home-state bank. And later, he acknowledges, he spoke to regulators urging that OneUnited be considered for a cash injection."

http://online.wsj.com/article/SB123258284337504295.html