Fannie and Freddie are the poster children for a lack of transparency and accountability. Fannie Mae employees deliberately manipulated financial reports to trigger bonuses for senior executives. Freddie Mac manipulated its earnings by $5-billion. They've misled us about their accounting, and now they are endangering financial markets. More than two years ago, I said: "If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose." Fannie and Freddie's lobbyists succeeded; Congress failed to act. They've stayed in business, grown, and profited mightily by showering money on lobbyists and favors on the Washington establishment. Now the bill has come due.(via The Wall Street Journal, Ed Morrissey)
What should be done? We are stuck with the reality that they have grown so large that we must support Fannie Mae and Freddie Mac through the current rough spell. But if a dime of taxpayer money ends up being directly invested, the management and the board should immediately be replaced, multimillion dollar salaries should be cut, and bonuses and other compensation should be eliminated. They should cease all lobbying activities and drop all payments to outside lobbyists. And taxpayers should be first in line for any repayments.
Even with those terms, sticking Main Street Americans with Wall Street's bill is a shame on Washington. If elected, I'll continue my crusade for the right reform of the institutions: making them go away. I will get real regulation that limits their ability to borrow, shrinks their size until they are no longer a threat to our economy, and privatizes and eliminates their links to the government.
Monday, July 28, 2008
QOTD
John McCain in a July 24th St. Petersburg Times op-ed:
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6 comments:
O Frater!
This is yet another in a series lately involving the U.S government helping companies upon which it either directly or indirectly relies without seriously addressing issues of bad (and sometimes criminal) but well-compensated management. In some ways, it seems as though this approach is replacing bankruptcy as a form of corporate restructuring. I agree that the U.S. should not make taxpayers (or defrauded shareholders) pay for such chicanery. The U.S. economy needs to be protected both in the short run and in the long run ... and not by executives laughing all the way to the banks.
- Cogito
I was initially encouraged with the views apparently presented in that editorial. However, McCain's unbelievable hypocrisy is documented here :
Both presidential candidates, Sens. John McCain (R-Ariz.) and Barack Obama (D-Ill.), expressed support for the legislation, though neither took a break from the campaign trail to attend yesterday's vote.
and here :
When asked about Congress' progress in passing the housing bill, McCain said he would have voted for the legislation.
So we have 2 candidates, neither of whom can hold a set opinion for more than an hour or so, when the opportunity to pander exists; both of whom disdain the constitution (McCain having no use for Habeas Corpus and the 1st and 4th amendments, whereas Obama has no use for the 2nd and 4th amendments).
We are really scraping the barrel on this one.
Fannie and Freddie have been ripping off borrowers and taxpayers for years. Suddenly, when the subprimes hit the fan, some people are noticing. Whew!
There are certainly better ways to achieve the purported goals of these ripoff agencies, e.g., keep those who qualify the borrowers in the picture with a vested interest in the loans being repaid, dissolve Fannie and Freddie ASAP.
Anony:
I agree--and have long favored privatizing Fannie and Freddie.
bobn:
The question of whether to vote for this support bill is, I think, distinguishable from the longer term question of reconstituting F&F as non-government-chartered entities.
The lenders must have a vested interest in the loans being repaid.
The question of whether to vote for this support bill is, I think, distinguishable from the longer term question of reconstituting F&F as non-government-chartered entities.
Not when you write an editorial blasting the bill, while having supported it. That is just gross hypocrisy. He is a SENATOR. The way a senator expresses outrage for a bill is to vote against it - unless he is totally bought and paid for, as was the case of McCain during the "Keating 5" scandal of the last banking crisis.
Furthermore, the WHOLE bill is an abomination. It will just get more crappy paper on the GSEs's books and the FHA's books, while doing nothing to address the real issues. The way to get rid of the GSEs is to get rid of the GSEs.
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