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Home Front: Politix
Barney Frank: Fannie and Freddie now a 'public policy instrument'
2010-01-06
Mortgage giants Fannie Mae and Freddie Mac are now basically a "public policy instrument" of the government, Rep. Barney Frank (D-Mass.) suggested Tuesday. Frank, the chairman of the House Financial Services Committee, asserted that the companies, which were taken over by the U.S. in September 2008, have become an extension of the government's policy-making tools.

"Remember now that Fannie and Freddie have been converted," Frank said during an appearance on CNBC. "Part of the losses of Fannie and Freddie are that since the housing collapse, Fannie Mae and Freddie Mac have become a kind of public utility."

Frank made that claim in response to reports that the government may lose as much as $400 billion from its conservatorship of Fannie and Freddie, assistance that was made available when the home loan companies were put on the brink of collapse due to the subprime mortgage crisis.

The Financial Services chairman defended those losses, saying they were incurred in part due to a conscious decision by the government to use the companies to extend assistance to homeowners with underwater mortgages.

"They're not what they used to be -- that inappropriately hybrid, private stock company, public policy instrument," Frank said. "They have become the public utility that finances housing in America to a great extent. Part of the loss is a public policy decision that it would be worse to not have some support for the housing market."

The companies, which were initially chartered by the U.S. government, had previously operated as private entities.
One could argue that Mussolini's definition of fascism ('everything inside the state, nothing outside the state') is operative here. But the reality is more that of the Russian mob -- grab everything that isn't nailed down; if it nailed down, get a crowbar, pry it loose, then grab it.

What Barney Frank is acknowledging is that Fannie and Freddie are now a playground for 'policy', while the directors make their multi-million dollar salaries, the friends of policymakers and directors get their special access, and the taxpayers get, well, nothing useful. "Support" for the housing market translates to "support" for the friends of Barney Frank. That is the new policy, see if it isn't over the next few years.

I almost find myself agreeing with the progressive left on this one: what we are seeing is a monetizing of the bank losses in the mortgage securities markets the last two years with the taxpayers holding the bag. The banks get their money back, the elites get to keep playing the New York-to-Washington-and-back game, the apparatchiks get their deals and favors, and the working and middle classes get higher taxes and mounting deficits.

Such a deal.

George Bush didn't do us any favors with the pell-mell rush to 'save' the financial system in September, 2008. I understand what the dangers were and I understand the need to do something, but he helped kick open a door that Obama, Geithner, Frank, Gorelick and many others are now going through in their plans to 'transform' America -- into, essentially, a kleptocracy.

This, by the way, is the essence of the David Brooks article that the conservative side was scorning elsewhere this week. Brooks is right about one key point: it is indeed the 'educated', the elites, that have caused a lot of problems, and it's the unwashed who are realizing it.

Not sure how we'll fight the war on terror and fight for freedom when the current bunch is done.
Posted by:Steve White

#13  You all can talk about Kaliphornia, Nancy Pelosi, Barbara Boxer and Dianne Feinstein all you want. But as long as Massachusetts keeps sending Bawney Fwank to Congress the voters of that state are the worst disgrace to democracy there has ever been. They make me fear for the future of democracy. It's so sad.
Posted by: Ebbang Uluque6305   2010-01-06 11:44  

#12  Hey, Dr. Steve, we're educated - why can't we get in on the stealing?
Posted by: Glenmore   2010-01-06 11:32  

#11  No Bwany. It is more like the worst public policy disaster in history that single handedly destroyed our banking industry.

You are a criminal bwany. You should be in pound you in the @$$ prison right now for your criminal activity in DC. SCUMBAG.
Posted by: newc   2010-01-06 10:39  

#10  Of course they're instruments of public policy, Barney. YOU made them so years ago. Their buying up of bad mortgages was a direct cause of the housing bubble. Waterboarding, bah. Something more serious is in order.
Posted by: Spot   2010-01-06 08:45  

#9  I don't understand why the top perps have not been WATERBOARDED.

I don't think you can waterboard Congressmen such as Dodd, Barney Franks, Waters, and the others.
Posted by: CrazyFool   2010-01-06 08:20  

#8  All together now ah....

Every morning
Every evening
Don't we have fun
Twins and cares dear come in pairs dear
Don't we have fun
We've only started
As mommer and pop
Are we downhearted
I'll say that we're not
Landlords mad and getting madder
Ain't we got fun
Times are so bad and getting badder
Still we have fun
There's nothing surer
The rich get rich and the poor get laid off
In the meantime
In between time
Ain't we got fun.
Posted by: Besoeker   2010-01-06 06:40  

#7  Of course my preferred result - after using any means to find and recover the stolen/mis-used/mis-handled monies - keelhauling in shark filled seas until done.
Posted by: 3dc   2010-01-06 06:32  

#6  In my humble opinion... the hedge funds, big banks and insurance companies HAVE DONE more DAMAGE to the USA than Al Qada could ever have dreamed of doing. I don't understand why the top perps have not been WATERBOARDED.
Posted by: 3dc   2010-01-06 06:29  

#5   Brooks is right about one key point: it is indeed the 'educated', the elites, that have caused a lot of problems

I'm not so sure about that. They just seem like the suckers who buy tonic for baldness, boobs and well... another word that begins with a b.
Posted by: Jumbo Slinerong5015   2010-01-06 05:55  

#4  Academic economists at annual American Economic Association meeting have a dim view of the government's response to the crisis. Over the past few days, economists here highlighted the many ways in which the lessons of the crisis have yet to sink in. Few think the U.S. and other governments have made needed repairs to the financial regulatory system. The crisis isn't over for banks. The worst-case scenarios in last year's stress tests, which restored the market's confidence in U.S. banks, included only two years' worth of losses. But banks are likely to face losses for many years to come as losses on real estate loans are realized. "If the U.S. government could credibly say [to banks]: We'll never bail you out again, it [the banking system] would collapse," said Kenneth Rogoff, of Harvard University. "The GSE structure [Fannie & Freddie] must be ended because it creates inevitable failure based on the incentives," said Dwight Jaffee, of UC-Berkeley.
Posted by: Anguper Hupomosing9418   2010-01-06 03:37  

#3  A conservative revolution would place Freddie Mac and Fannie Mae on the auction block.
Posted by: badanov   2010-01-06 01:10  

#2  You're right, I meant 'not sure', and have corrected it. Thanks.
Posted by: Steve White   2010-01-06 00:43  

#1  Now sure how we'll fight the war on terror and fight for freedom when the current bunch is done. I think you meant 'not sure.' I don't see how we'll BE ABLE to fight the war on terror & fight for freedom when the current bunch is done with us. When they're done with us, we may be done for.
Posted by: Anguper Hupomosing9418   2010-01-06 00:31  

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