Free Markets, Free People
Two of the the institutions most responsible for the housing crisis, despite Barney Frank’s claims to the contrary, are still in crisis themselves (a third is the very institution Frank called home – Congress).
Fannie Mae said Wednesday it lost $2.4 billion during the fourth quarter of 2011 and $16.9 billion for the full year.
It has had worse years, remarkably. Fannie lost about $60 billion in 2008 and $72 billion the following year–two of the 10 largest corporate losses ever. Sibling Freddie Mac is responsible for a third, a $51 billion loss in 2008.
These two institutions, both set up by and working at the behest of the federal government, have a very checkered history.
For those who have always wondered what “Fannie Mae” stands for, it is the Federal National Mortgage Association, begun in 1938 during the Great Depression as a part of New Deal. So those who argue that it is a “private corporation” are simply uninformed.
Both organizations have a single purpose: “to expand the secondary mortgage market by securitizing mortgages in the form of mortgage-backed securities (MBS), allowing lenders to reinvest their assets into more lending and in effect increasing the number of lenders in the mortgage market by reducing the reliance on thrifts.”
As it turns out, they got way out on a limb with their purpose, driven by government policy and crony capitalism.
What set off the debacle through which we suffered? Here’s the short story:
In 1992, President George H.W. Bush signed the Housing and Community Development Act of 1992. The Act amended the charter of Fannie Mae and Freddie Mac to reflect Congress’ view that the GSEs "… have an affirmative obligation to facilitate the financing of affordable housing for low- and moderate-income families in a manner consistent with their overall public purposes, while maintaining a strong financial condition and a reasonable economic return;" For the first time, the GSEs were required to meet "affordable housing goals" set annually by the Department of Housing and Urban Development (HUD) and approved by Congress. The initial annual goal for low-income and moderate-income mortgage purchases for each GSE was 30% of the total number of dwelling units financed by mortgage purchases and increased to 55% by 2007.
In 1999, Fannie Mae came under pressure from the Clinton administration to expand mortgage loans to low and moderate income borrowers by increasing the ratios of their loan portfolios in distressed inner city areas designated in the CRA of 1977. Additionally, institutions in the primary mortgage market pressed Fannie Mae to ease credit requirements on the mortgages it was willing to purchase, enabling them to make loans to subprime borrowers at interest rates higher than conventional loans.
George H.W. Bush began the slide and Bill Clinton lit the afterburners. And while the industry attempted to take advantage of the situation it also needed an easing of credit requirements to meet the policy goals of the CRA. And anyway, the Federal government was guaranteeing this mess. Crony capitalism at its finest.
The warning signs about the eventual end were everywhere. And any number of people issued those warnings:
In 1999, The New York Times reported that with the corporation’s move towards the subprime market "Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980s."
Also in the New York Times, Alex Berenson reported in 2003 that Fannie Mae’s risk was much larger than is commonly held.
The eventual end to such nonsense was almost precisely foretold:
In his 2006 book, America’s Financial Apocalypse, Mike Stathis also warned about the risk of Fannie Mae helping to trigger the financial crisis: “With close to $2 trillion in debt between Freddie Mac and Fannie Mae alone, as well as several trillion held by commercial banks, failure of just one GSE or related entity could create a huge disaster that would easily eclipse the Savings & Loan Crisis of the late 1980s. This would certainly devastate the stock, bond and real estate markets. Most likely, there would also be an even bigger mess in the derivatives market, leading to a global sell-off in the capital markets. Not only would investors get crushed, but taxpayers would have to bail them out since the GSEs are backed by the government. Everyone would feel the effects. At its bottom, I would estimate a 30 to 35 percent correction for the average home. And in ‘hot spots’ such as Las Vegas, selected areas of Northern and Southern California and Florida, home prices could plummet by 55 to 60 percent from peak values.”
And here we are.
The cost to you for this the mess created and driven by government policy and taken advantage of by lenders? A lot.
Both Freddie and Fannie are supposedly “for profit” corporations. Profits, however, have been in short supply (but bonuses to top cronies haven’t):
During the three years leading up to the house price peak, Fannie reported annual profits of between $4.1 billion and $6.3 billion, and Freddie, $2.1 billion to $2.9 billion. During the five years since, Fannie lost a cumulative $163 billion, and Freddie, which hasn’t yet reported fourth quarter results for 2011, $91 billion.
Both Fannie and Freddie pay dividends to the Treasury Department as a condition of their government sponsorship, but both have regularly requested larger sums than they have paid. For example, Fannie said Wednesday that it paid $2.6 billion in dividends to the Treasury during its fourth quarter, but that it would soon submit a request for $4.6 billion to offset losses.
Fannie says it requested a total of $116 billion from the Treasury since the fourth quarter of 2008 and paid about $20 billion in dividends. Fannie requested $72 billion and paid $15 billion.
Or, as the article breaks it out in the nation of 309 million, the cost is $1,300 for each American household – owner or renter.
This is what happens when government’s decide they know better than markets. When they let unsound political policies that create perverse financial incentives rule the day. When they put financial prudence behind political gain.
Hopefully we’ll learn something out of this. But we won’t if each side continues to deny its role in this mess. It was government who set the perverse policy and industry to took advantage of it. However, what should be clear to anyone is that if there had been no policy, there’d have been nothing of which to take advantage.
As usual, the tax payers is left holding the multi-trillion dollar bag for this monumental screw-up.
This should be a big story but in all likelihood it won’t be. But it gives you an insight to the depth of intrusion into the housing market by the federal government. Don’t forget, the official story is that the housing problem it is all the fault of big banks. Read this story carefully, because there is much here that should help explain why that just isn’t so:
First, the job of Freddie Mac according to this article:
Freddie’s charter calls for the company to make home loans more accessible. Its chief executive, Charles Haldeman Jr., recently told Congress that his company is “helping financially strapped families reduce their mortgage costs through refinancing their mortgages.”
Freddie Mac, along with its cousin Fannie Mae, was bailed out in 2008 and is now owned by taxpayers. The companies play a pivotal role in the mortgage business because they insure most home loans in the United States, making banks likelier to lend. The companies’ rules determine whether homeowners can get loans and on what terms.
The dirty little secret is they were always “owned” by the taxpayer. They were government subsidized entities (called “quasi-governmental”) whose policy was set by the federal government.
So who is in charge of Freddie Mac?
The Federal Housing Finance Agency effectively serves as Freddie’s board of directors and is ultimately responsible for Freddie’s decisions. It is run by acting director Edward DeMarco, who cannot be fired by the president except in extraordinary circumstances.
So let’s see, we now have a guaranteer of mortgages fully run by government (government can’t hide behind the “quasi” label anymore) and run by an essentially unaccountable bureaucrat is responsible for setting the “rules” which “determine whether homeowners can get loans and on what terms”. Yeah, no intrusion there.
Wonderful so far, yes?
So what’s our friendly little government institution that its CEO says is “helping financially strapped families reduce their mortgage costs through refinancing” been up too lately?
Betting against the success of its “charter”.
But the trades, uncovered for the first time in an investigation by ProPublica and NPR, give Freddie a powerful incentive to do the opposite, highlighting a conflict of interest at the heart of the company. In addition to being an instrument of government policy dedicated to making home loans more accessible, Freddie also has giant investment portfolios and could lose substantial amounts of money if too many borrowers refinance.
Note that one phrase in the second sentence before we move on: “In addition to being an instrument of government policy dedicated to making home loans more accessible …”. That’s something that left continually denies, but, in fact, led to the type borrowing that brought the housing market down. Both Freddie and Fannie have been “instruments of government policy” since their establishment. Anyone who continues to deny that is simply denying reality.
Moving on, however, you see an inherent conflict of interest which all the experts are trying to waive away as something “walled off” from the side which makes the lending rules for mortgages. No conflict they say (one has to wonder what government would say if the same conditions existed in a private concern).
But (there are lots of “buts” in this story), here’s the rub:
The trades raise questions about the FHFA’s oversight of Fannie and Freddie. But the FHFA is not just a regulator. With the two companies in government conservatorship, the FHFA now plays the role of their board of directors and shareholders, responsible for the companies’ major decisions.
Under acting director DeMarco, the FHFA has emphasized that its main goal is to limit taxpayer losses by managing the two companies’ giant investment portfolios to make profits. To cover their previous losses and ongoing operations, Fannie and Freddie already had received $169 billion from taxpayers through the third quarter of last year.
The FHFA has frustrated the administration because the agency has made preserving the value of the companies’ investment portfolios a priority over helping homeowners in expensive mortgages.
No conflict though. The rule maker is also prioritized profit over refinancing. Again, wondering about the private side of things, does anyone doubt that a private concern would be in the government’s crosshairs if the same things were as obvious there?
It’s a bit like state lotteries. If you start a numbers game, you go to jail. The state reserves only to itself the right to run numbers games. In this case, what would have the FBI raiding the place and grabbing computers if it was a private company is simply a “debate” within the government on whether or not there’s any problem here.
Even though Freddie is a ward of the state, top executives are highly compensated. Peter Federico, who’s in charge of the company’s investment portfolio, made $2.5 million in 2010, and he had target compensation of $2.6 million for last year, when most of these leveraged investments were made.
One of Federico’s responsibilities — tied to his bonuses — is to “support and provide liquidity and stability in the mortgage market,” according to Freddie’s annual filing with the Securities and Exchange Commission. Mortgage experts contend that the inverse floater trades don’t further that goal.
Sometimes it makes you wonder who serves whom, doesn’t it? I look at stories like this and tend to wonder if, in fact, we’ve finally transitioned from a government of the people to one that can best be likened to the mafia. As this story points out, the intrusion is to such a depth now that government priorities no longer reside on the side of serving the people, but instead on serving government and its bureaucracies.
Let freedom ring.
While the administration regularly takes Wall Street to task for what it calls excessive bonuses, especially to companies bailed out by taxpayer money, it has been relatively silent about the bonuses approved by its own Federal Housing Finance Agency for two quasi-government companies at the center of the housing market meltdown:
The Federal Housing Finance Agency, the government regulator for Fannie and Freddie, approved $12.79 million in bonus pay after 10 executives from the two government-sponsored corporations last year met modest performance targets tied to modifying mortgages in jeopardy of foreclosure.
Remember AIG and the huge uproar over the bonuses they were contractually bound to pay soon after the bailout? Well these bonuses weren’t wrapped up in any contractual binding. These have been approved since that time. And to top it off, on average, they’re larger bonuses than AIG paid.
You’d think the FHFA would have a clue, wouldn’t you? You’d think they’d understand the “optics” of this sort of a payout of taxpayer money, not to mention that the government is supposedly trying to cut spending.
But obviously they don’t understand that.
Thankfully the Congress has thus far reacted to the situation in a swift and positive manner (for once):
The House Financial Services Committee, responding to lawmaker anger over compensation at Fannie Mae and Freddie Mac, approved a measure that would suspend the compensation packages for executive officers at the companies. The bill also would require employees of the two firms to be moved onto a pay scale that lines up with federal financial regulators including the Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency.
“Awarding lavish pay packages to the heads of these companies that have accepted $170 billion in taxpayer cash can’t be defended,” Representative Spencer Bachus of Alabama, the panel’s chairman and sponsor of the bill, said today.
We will see if they carry it on through and actually get something passed, but even Barney Frank, who initially opposed the bill is now supporting it. And when Freddie and Fannie have lost Barney, they’re in trouble:
Representative Barney Frank, the top Democrat on the Republican-controlled panel who initially opposed the measure, voted for the bill because of what he described as “insensitivity” by the companies in continuing to award bonuses.
“I had hoped that they would use restraint on their own because I think it’s better that we not intervene,” Frank, of Massachusetts, said today. “But they did not.”
Again, the “insensitivity” wasn’t something the companies did, although they likely requested the bonuses. It was the FHFA, a governmental agency, which approved the bonuses. It is business as usual among the bureaucrats who are obviously “insensitive” to the situation and continue to lavish taxpayers money where ever they decide it is deserved. If you want a clue as to why the federal government’s spending remains out of control, this is a good example.
Bureaucracies are forever it seems and they become the unaccountable drivers of government action. It is there which, if any meaningful reform is ever to be undertaken with shrinking the size and cost of government is to be done, where reformers must start.
Following the downgrading of the US sovereign debt, S&P has also downgraded the credit ratings of the two quasi-government agencies, Freddie Mac and Fannie Mae, to the same level as the US (AA+). The reason given by S&P:
The downgrades of Fannie Mae and Freddie Mac reflect their direct reliance on the U.S. government. Fannie Mae and Freddie Mac were placed into conservatorship in September 2008 and their ability to fund operations relies heavily on the U.S. government. In addition to the implicit support we factor into our ratings, the U.S. Treasury has demonstrated explicit support by providing these entities with capital quarterly, as necessary.
The projected cost to bailout Fannie and Freddie through 2020 is estimated to be between $373 billion and $376 billion. The agencies which Barney Frank assured us were in fine financial shape are, in fact, giant money pits. They are indeed reliant upon the US government for their subsidy as is obvious by the future funding that’s being planned for them. It is believed that approximately $291 billion dollars was necessary in 2009 to prop up the two agencies.
Of course it is possible that the administration will try to attack this finding by S&P as well. However, the reality is the agency’s downgrade has indeed had an effect, no matter how hard the administration and various Democrats attempt to attack the messenger. Everyone has known at some point it wasn’t a matter of “if” the US debt would be downgraded, but “when”. And all the grousing and griping we’ve seen the last few days, all the attempts at blame-shifting and attack politics don’t change that simple bit of reality. Freddie Mac and Fannie Mae’s downgrade simply puts a cherry on the downgrade sundae.
If you live in Frank’s district, this is the only reason you need to vote for Sean Bielat, his GOP opponent. I.e. Frank is about to remake Fannie Mae and Freddie Mac in his own image. That after the two institutions that he fought so hard to support with your tax dollars and attempted to keep Congressional oversight to a minimum, tanked and almost took the economy with them.
The Washington Post has a mostly sympathetic piece (poor Barney, he only wanted to use your money to help the poor put a roof over their heads) which, if you read carefully between the lines, at least hints at most of the story. And the rest of the story ends with us pumping $160 billion and counting into the two institutions after the government took them over.
Back when it all started, Frank identified cash cows in the two institutions which would allow him to fulfill his personal agenda:
Fannie and Freddie were in the business of buying and guaranteeing mortgage loans from private lenders, which in turn could take the money and make even more loans to prospective homebuyers or developers looking to build apartment buildings.
Democrats, led by one of Frank’s closest allies, Rep. Henry B. Gonzalez (D-Tex.), wanted to require the two companies to spend a specific percentage of their funds on affordable housing. Under the proposed legislation, the companies were to buy home loans made to lower- and middle-class people and loans going to fund development of affordable rental housing.
This represented a rich new vein of money.
But even as Democrats were looking to expand Fannie and Freddie’s mission, a small group of Republicans, led by Rep. Jim Leach of Iowa, urged the government to pay more attention to the dangers posed by the firms.
Let’s see – “rich vein of money” or oversight and caution? “Rich vein of money” of course. So Leach’s warning were pushed aside:
The companies had been growing ever larger. Yet compared with their rivals in the banking industry, they were putting aside relatively little capital to cover potential losses. Leach proposed a tough new regulator that would restrain Fannie and Freddie.
Nah. So onward we went, huge sums of money flowing out the door, very little oversight, with a political agenda driving the bus instead of financial sanity. That was in 1992. In 2003, the warnings were still coming and getting louder:
By late 2003, the firms had taken on more than $4 trillion in debt, rivaling that of the entire federal government. Yet Frank, who had by then become the top Democrat on the influential House Financial Services Committee, still wasn’t focused on the risks. He had his sights set on what else they could do to promote for affordable housing, particularly low-cost rental housing.
At a hearing called by Republicans, who controlled the committee, Frank made clear that he was reluctant to tighten oversight because it could limit the ability of Fannie and Freddie to help people get a roof over their heads.
The companies, he urged colleagues, "are two of the very important tools that we have" and had to do what "the market in and of itself will not do. "They were "not endangering the fiscal health of this country," he continued.
But, of course, they were and did endanger the fiscal health of the country. Denial was his only weapon and he used it constantly – because his personal political agenda was apparently worth the risk – at least to him. He even said once he wanted to “roll the dice” a little more, perfectly willing to risk the fiscal future of the country to push his political agenda.
And you all know the rest of the story.
Fannie and Freddie proceeded to load up on securities backed by risky mortgages, such as subprime loans and no-document loans. The firms asserted that they were aggressively fulfilling their affordable housing mission, and some risky mortgages were indeed going to borrowers who couldn’t otherwise afford a home.
But many of the loans were going to people who could have afforded traditional mortgages, and the companies were bulking up on the risky loans purely in pursuit of even larger profits.
When the housing market crashed, the unprecedented surge in mortgage defaults blew a hole in the firms’ finances.
The Democrats and Frank want to deny this part of the story or pretend it is an insignificant part of it or that what happened to Freddie and Fannie were a result of Wall Street’s shenanigans.
Not really. The prime buyer and bundler of the sub-prime mortgages were those two institutions. And, as the article notes, Freddie and Fannie believed they were “aggressively fulfilling their affordable housing mission” as legislatively enabled by Barney Frank and Congress.
And what has he managed to get for his effort?
For all his efforts, Frank readily acknowledges that there are more people needing decent housing than there were when he started in Congress. And with millions of others losing their homes to foreclosure, Frank asks to be judged by how much worse things would have been without him.
"In the political world, you get measured on the ultimate results," he said. "I think we’ve prevented things from getting as bad as they otherwise might have been."
Really? Have you looked around you Mr. Frank? This ranks right up there with the unmeasurable “saved jobs” nonsense pushed by the administration in the midst of 9.6% unemployment. And now Frank is going to get another chance to shape the housing market’s future?
Time to put him into retirement before he can again try to do what he did last time. Another reality of the “political world” is you should only get one chance and if you screw it up as badly as Frank did, you should join the ranks of the unemployed.
Well, not really, but that pretty much describes metaphorically how often Paul Krugman and I agree on things. But today, Krugman, wondering what Ben Bernanke of the Fed is going to say today in his big speech believes it will probably be more of the same. Albeit, we’re in a recovery, more slowly than we’d like and things will soon get better. Krugman isn’t buying it (and neither am I. If this is a recovery, I’d hate to see a recession). :
Unfortunately, that’s not true: this isn’t a recovery, in any sense that matters. And policy makers should be doing everything they can to change that fact.
Krugman also zeros in on the main problem that those policy makers should focus on:
The important question is whether growth is fast enough to bring down sky-high unemployment. We need about 2.5 percent growth just to keep unemployment from rising, and much faster growth to bring it significantly down. Yet growth is currently running somewhere between 1 and 2 percent, with a good chance that it will slow even further in the months ahead.
In fact, the GDP number for this past quarter is 1.6%. That’s revised sharply downward from the original 2.4% reported and touted by Democrats recently. That, as Krugman points out, isn’t a good number when you are looking at unemployment.
Krugman then chastises those who are pumping sunshine up our skirts when the real economic news doesn’t warrant it – like the President and VP. Bernanke and Geithner:
Why are people who know better sugar-coating economic reality? The answer, I’m sorry to say, is that it’s all about evading responsibility.
Ya think! Gee wish I’d been saying that for, oh, I don’t know, 18 months. For 12 of that it was Bush’s fault. For the past 6, it’s been all sunshine, roses and “recovery summer”. In effect, although not at all as blatantly, Krugman is validating John Boehner’s call to fire Obama’s economic team. Because it is clear that the policy makers haven’t a clue of how to fix this mess.
At this point in his op-ed, Krugman reverts to his old self – a hack. After talking about evading responsibility, he goes for the “obstructive Republicans” canard.
And when he finally gets around to saying what he’d do, as you might suppose, it is spend more money that we don’t have.
Addressing the Fed he says:
The Fed has a number of options. It can buy more long-term and private debt; it can push down long-term interest rates by announcing its intention to keep short-term rates low; it can raise its medium-term target for inflation, making it less attractive for businesses to simply sit on their cash. Nobody can be sure how well these measures would work, but it’s better to try something that might not work than to make excuses while workers suffer.
In layman’s terms he’s saying let inflation loose and buy more debt (borrow). He then covers his rear by saying “hey, it may not work, but it is better than doing nothing”.
I’m not at all sure that’s the case. In fact, my guess is if you let the inflation dragon out of the cage, you’ll never recapture it until it has ravaged the economy. All that money that’s been pumped into the economy has to be wrung out at some point. And there are no painless ways to do that of which I’m aware.
As for the administration his advice is as follows:
The administration has less freedom of action, since it can’t get legislation past the Republican blockade. But it still has options. It can revamp its deeply unsuccessful attempt to aid troubled homeowners. It can use Fannie Mae and Freddie Mac, the government-sponsored lenders, to engineer mortgage refinancing that puts money in the hands of American families — yes, Republicans will howl, but they’re doing that anyway. It can finally get serious about confronting China over its currency manipulation: how many times do the Chinese have to promise to change their policies, then renege, before the administration decides that it’s time to act?
Sure, let’s hand even more money to the two financial black holes – Freddie and Fanny – that have already sucked down half a trillion dollars we don’t have trying to shore up their loses and return them to solvency. Republicans have every reason to howl about Freddie and Fannie. If Krugman were anything but a hack, he’d have to admit that.
And if he thinks the Chinese – who are actually in a real recovery – are going to stomp on their economic progress to fix ours, he’s dreaming. Both proposals are absurd on their face. But then when it comes to actual solutions, I’ve come to expect that from him.
However, at least in the first part of his column, he and I were in pretty much perfect agreement. I need to go take a bath now.
James Pethokoukis is hearing the rumors of something which might put a number of you in the situation where you’re paying down your neighbor’s mortgage – all in the name of politics. I’ll let him explain:
Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. An estimated 15 million U.S. mortgages – one in five – are underwater with negative equity of some $800 billion. Recall that on Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help. The actual vehicle for the bailout could be the Bush-era Home Affordable Refinance Program, or HARP, a sister program to Obama’s loan modification effort. HARP was just extended through June 30, 2011.
Essentially Fannie Mae and Freddie Mac would be the vehicles for this $800 billion bailout. As mentioned above, the “$400 billion limit” for financial assistance to the two institutions was waived by Congress. And, HARP has been extended. The ability to do what Pethokoukis is hearing certainly exists.
As I mentioned in the previous post, the election this November isn’t shaping up well for Democrats. And the administration knows that without the majority in the House and Senate, its agenda is dead. As Pethokoukis points out, the midterms are expected to be a blood bath for Democrats and this sort of a move may be seen as a last hour way to change that outcome. The GSEs (Freddie and Fannie) are about the only “levers” left for the White House to pull. And with the economy slowing and the President’s approval ratings tanking, those levers are looking mighty tempting:
The mortgage Hail Mary would be a last-gasp effort to prevent this [loss of House and working majority in Senate] from happening and to save the Obama agenda. The political calculation is that the number of grateful Americans would be greater than those offended that they — and their children and their grandchildren — would be paying for someone else’s mortgage woes.
And, of course, it would be a backdoor “stimulus” that many on the left think is needed.
It may not happen, but as pointed out, the rumors are pretty darn strong with Wall Street firms privately warning their clients it is a distinct possibility. It would be an incredible move that, given the mood of the country, could backfire spectacularly if done. But the political calculation may be that if Democrats are supposed to lose badly in November anyway, why not try.
The financial consequence? Bah … we’re talking politics here, the “religion of the left”. They’re likely to do whatever they think is necessary, consequences be damned. And we’ll be left, as usual, holding the bag.
Apparently the “pay czar” is about to release a report that the Wall Street bonuses, paid by financial firms that had received bailout money, were largely “unmerited”.
With the financial system on the verge of collapse in late 2008, a group of troubled banks doled out more than $2 billion in bonuses and other payments to their highest earners. Now, the federal authority on banker pay says that nearly 80 percent of that sum was unmerited.
In a report to be released on Friday, Kenneth R. Feinberg, the Obama administration’s special master for executive compensation, is expected to name 17 financial companies that made questionable payouts totaling $1.58 billion immediately after accepting billions of dollars of taxpayer aid, according to two government officials with knowledge of his findings who requested anonymity because of the sensitivity of the report.
Of course, that is Mr. Feinberg’s opinion. However I don’t know his opinion about this, reported in March of this year:
Fannie Mae is due to pay retention bonuses of between $470,000 and $611,000 this year to some executives, despite enormous losses at the government-backed mortgage company. Fannie’s main rival, Freddie Mac, also plans to pay such bonuses but hasn’t yet provided details.
I know what my opinion is, but of course our government won’t talk about these two entities – both of which had a key, if not major role in the financial collapse. You see, if they investigated this with an eye toward actually figuring out how that collapse transpired, it would inevitably lead back to those two institutions and the Community Reinvestment Act. And that would lead to calls for “accountability”, a standard to which only generals and the “little people” are held. With government and politician’s popularity rating already below that of used car salesmen, they’d prefer to pretend it all happened on Wall Street.
Not that anyone should be particularly surprised by that.
I have no idea why, but I have little desire to write about politics today. Perhaps because it all seems so absurdly screwed up. Maybe because I think we may have crossed some imaginary line and I wasn’t aware of it and this is never going to find its way back to where our founders started it.
I mean, for goodness sake, you have book publishing companies putting warning labels on publications of the Constitution claiming it is a product of its time and doesn’t reflect present values. Really?
Maybe. I mean does anyone think the government we have today and its size, scope and depth of intrusion are anything like the “values” reflected by those who wrote the document? Does anyone think today’s “values” are better than those the publishing company thinks you should discuss with your kids?
There’s a certain level of frustration in tracking this, talking about it and seeing nothing change, and, in fact, watch everything go even further south.
And now we have this legislator for a president who just hasn’t the foggiest idea of what it means to be an executive and a leader. If you’ve been an observer of politics as long as I have, you can see the dark clouds forming on the horizon.
Internationally, it is the usual flash points, but you can see the trouble building and you get the idea that the troublemakers are sensing a weak horse here.
Domestically they’re already here I suppose. We just don’t know if it’s going to be a bad thunderstorm, a torrential rain storm or a freaking tornado. The other day I reported that well over half of all companies – and that’s the conservative number – will most likely be required by law to either change their insurance plans or drop them and pay a fine.
What kind of foolishness is that? Well it is exactly the kind of foolishness that poor legislation, rushed through to satisfy an agenda item instead of the people these politicians serve gets you. And now they’re catching flak and they don’t like it.
We had another melt down by a legislator last week. Bob Ethridge fires at a bunch of students asking him questions on the street. It is unseemly, ungentlemanly and frankly, unacceptable. These “public servants” display more of the arrogance of an aristocracy than they do the humbleness of someone serving the public interest.
And that’s across the board, local to federal, left and right.
There’s an anger festering the likes of which I’ve not seen in a long time. People are angry. Not just the activist right or even the activist left. Good old fly-over country middle America has had enough. Enough of being treated like they’re too dumb to understand. Enough of being characterized as racist or biggoted when they disagree about policy and politics. They are freaking tired of being ignored. The Tea Party movement is only one indicator of this deep resentment that is growing toward government in general and what it takes from them and what it delivers in return. I see the Tea Party as sort of like the statistic for talk radio. Only about 1% of those who listen call a talk radio show. My guess is only about 1% of those who feel like the Tea Partiers show up for their events.
I think this current administration is going to accomplish one thing, and that is bring this all to a head. The federal response to the oil spill has been pitiful. The President and Congress continually ignored the public and rammed this terrible mess of a health care bill through over their objections. The mismanagement of Fannie Mae and Freddie Mac may end up costing taxpayers as much as a trillion dollars and they’re focused on Wall Street. Congress won’t pass a budget until after the November election – even though it is their job – because it may adversely effect the chances of some members to win re-election.
Well, there’s a real easy way to solve that problem.
Politics has triumphed over good government. Agendas have replaced common sense. On both sides, party seems more important than “the people”. As Glenn Reynolds once described them, we’ve been inflicted with the worst political class in the history of this country. And it is painfully obvious.
Anyway, there’s about 700 words about why I’m not in the mood to write today. These thing come and go and I usually let them run their course. Heck, it may be over in a couple of hours as something jumps off the page at me. But until then, I think there’s plenty in this minor rant to talk about.
Talk about whatever strikes your fancy.
Some things that have caught my eye:
Is the Obama administration trying to unionize the government procurement process?
Speaking of unions, what is SEIU’s president, Andy Stern, doing on a Obama’s “deficit reduction” panel. Does that say “I’m serious about this” to you?
Anyone else see the irony in the Hillary Clinton claim that domestic political infighting is hurting America’s image abroad?
Brits aren’t buying the “January was the warmest month ever” nonsense.
Speaking of the Brits, is there a reason we won’t back their claim to the Falklands in a drilling-rights dispute?
Apparently some Dems are calling for Charles Rangel to step down from his House committee chairmanship because of ethics violations. Why isn’t Nancy “the most ethical Congress in history” Pelosi doing the same?
Paul Ryan was the rock star in the health care summit. To date no one has refuted his fiscal points.
The Obama administration has consistently talked about the Bush administration not counting the cost of war in its deficits. Well, it isn’t a war, but the Obama administration continues to nrefuse to cout the hundreds of billions going to Freddie Mac and Fannie Mae – primarily because it would bump this year’s 1.4 trillion deficit by another 300 billion.
And finally there’s some relatively good news. Jeremy Lott says there have been quite a few “quiet libertarian victories” here lately.