Despite the fact that taxpayers have already contributed more than $145 billion to bailing out Fannie Mae and Freddie Mac, Secretary of Treasury Timothy Geithner refuses to follow the Congressional Budget Office’s (CBO) recommendation that these two entities be considered part of the federal government[1]. At this point in time, taxpayers own about 80 percent of the GSEs, and the CBO believes that this essentially makes them government bodies.
However, Geithner has refused to incorporate them into the government as official federal entities, stating that “We do not think it is necessary to consolidate the full obligations of Fannie and Freddie onto the nation’s budget.” There’s the rub. It is not that he does not think that these are government bodies; we all know that they are and so does the federal government. This is simply posturing designed to keep the bailouts of Fannie and Freddie, which are ever-growing and show no real signs of slowing or particular effectiveness, from hitting the books.
Fortunately for Geithner, there is little chance of the two GSEs being declared federal entities, since Chairman of the Financial Services Committee in the House of Representatives Barney Frank has banned consideration of amendments to the financial reform bill that would change the way that Fannie and Freddie are run.
How do you think Fannie and Freddie should be classified? Does it matter?
Thank you for reading the Bryan Ellis Real Estate Letter. Your comments and questions are welcomed below.
[1] http://www.tradingmarkets.com/news/stock-alert/fnm_fair-and-open-conference-chairman-frank-blocks-republicans-from-offering-amendments-to-reform-fanni-1003064.html
A complete BUST…………………………
I would like to see them “out of business” entities… victims of stupid, incompetent management.
Shoved up Barney Frank’s you know what!
I am not sure what kind of entity that would make them, I know it would not change how they smell however!
As mentioned complete BUSTS. Let them go under so we can reset the housing market and start over after the turmoil ends.
What we need is less govt. That means making sure that there is a GOP majority in the next Congress, so that Barney Frank can’t run the Financial Services Committee. We need a 21st Century Tea Party that will restore our capitalistic competitive environment that allows us to grow naturally.
We should all be reading Ayn Rand’s Atlas Shrugged. This is where we are headed in the very short term if we get 4 more years of Obama.
Ayn Rand’s Atlas Shrugged had capitalists of integrity and responsibility. What we have today are folks with no accountability and no sense of obligation whatsoever to even the good of their own companies. As much as government regulation may stick in the craw of a true objectivist, the reality is that unregulated greed has allowed unscrupulous individuals to play fast and loose, engaging in highly risky behaviors, with OPM – other people’s money.
While I’m all for the rugged individual being able to strike out in business without piles of unnecessary overhead interfering with the ability to innovate, I’m against the whiny children we have who want no one to tell them what to do whatsoever… never heard of the word “no” and can’t conceive of the idea of personal responsibility and treating your neighbor as yourself. These folks look at everyone as a piece of meat and our lack of adequate regulation has allowed them to do it.