While the rest of the nation stagnates and one out of five Americans is out of a job, President Obama, in the still of the night, approved UNLIMITED FUNDING for mortgage giants Fanny Mae and Freddy Mac. The two entities that are probably singularly most responsible for the crash of the sub-prime housing loan market.
Although they were successful in lining the pockets of many Democratic operatives along the way, in 2008 Fanny and Freddie exploded, taking Bear Stearns with them and leading to the failure of many other smaller entities, as we have seen. Hillary Clinton, Barack Obama and Christopher Dodd were all beholden to Fanny and Freddie for substantial contributions. The US government has bailed Fanny and Freddie out to the tune of ONE POINT FIVE TRILLION DOLLARS in direct and indirect aid. Those are TAXPAYER dollars, it should be noted.
What was going on was these two quasi-government backed Corporations, being major purchasers of SUB-PRIME mortgage paper, were BUNDLING these dubious assets and selling them as bonds. This precarious process worked as long as housing prices continued to rise. As early as 2003, regulators were warning of looming catastrophe “in the unlikely event that the two giants failed”.
Republican efforts to regulate Fanny and Freddie were defeated BY DEMOCRATS, IN PARTY-LINE VOTES. Since their failure in 2008, the two mortgage giants have consumed 1.1 trillion dollars in Fed backing and thus far this year have lost 124.4 billion dollars which has had to be picked up by the Federal Reserve.
Now the treasury has removed the 400 BILLION dollar cap on funding losses AT THE DIRECTION OF THE OBAMA ADMINISTRATION, replacing it with an UNLIMITED FUNDING CAP! That’s like handing a chronic alcoholic a half gallon of booze and telling him to knock himself out.
THIS is Obama’s much vaunted fiscal responsibility?
Fanny Mae and Freddie Mac are headed down the same road as before and we have the SAME Democrats running interference for them. Wonder who they’ll blame it on this time?
Semper Vigilans, Semper Fidelis
© Skip MacLure 2009