Origins of an American Kleptocracy

Zero Hedge ^ | 2 Jan 2010 | "Marla Singer"

[oblomov]

Some days ago we wondered aloud at the blank check extended to Fannie and Freddie along with the suspiciously convenient timing of those announcements on Christmas Day. Back then we wondered if we had been told the entire story. To wit:

So. Let us summarize:

We do not expect the GSEs to grow their portfolios at all, so we are fixing the bloated portfolio problem by easing the portfolio caps to permit a quarter trillion dollar expansion thereof.

We do not expect either of the GSEs to need more help from the Treasury, so we are responding to the underutilized $400 billion "lifeline" the GSEs have with the Treasury ($111 of which is currently used) by expanding it to... infinity.

Oh, and though they have collectively lost nearly $200 billion, we are paying the CEOs around $6 million each.

Great work team! It's already almost 11:00. Let's go to lunch.

The other shoe having now dropped, Bloomberg has joined in our skepticism:

Taxpayer losses from supporting Fannie Mae and Freddie Mac will top $400 billion, according to Peter Wallison, a former general counsel at the Treasury who is now a fellow at the American Enterprise Institute.

“The situation is they are losing gobs of money, up to $400 billion in mortgages,” Wallison said in a Bloomberg Television interview. The Treasury Department recognized last week that losses will be more than $400 billion when it raised its limit on federal support for the two government-sponsored enterprises, he said.

[oblomov]

As one of the commenters notes, a fourth branch of government has been created to manage 1/3 of the US economy, and it is entirely unaccountable to the people.

[Erik Latranyi]

Could this be a means of writing off mortgages for DNC supporters, allowing them to funnel more cash back into the party?

[La Lydia]

Oh yes:

Perhaps we are being too harsh on the likes of Barney Frank and other GSE proponents. Adopting a slighty more relativistic economic morality, we might count Frank as one of the greatest legislators of all time. Consider: To the extent Mr. Frank and his ilk (that would be Senate Banking Committee Chairmen Paul Sarbanes and now Christopher Dodd) self-identify as advocates for low-cost housing for those ill-able to afford it, or beset by poor credit, the last 20 years have represented the largest single wealth transfer (composed primarily of real estate and flat screen TVs) to that sector known to us.

... Of course, had they simply proposed such a measure in Congress it would have been laughed from the chamber. And yet, it almost seems as if these individuals simply wrote a multi-trillion dollar check to their constituents that happened to be drawn on the United States Treasury.

Which they did.

[Carley]

Why isn’t there a clawback from those in place during this debacle.

Rahm, Gorelick, and assorted other obamao cronies?

[Erik Latranyi]

There was no investigation into what caused the economic meltdown, no questions were asked and other than a few anti-capitalist speeches, no reasons given.

[Carley]

you have mail

[depressed in 06]

It really is time to repeal all of FDR’s follies.

[silverleaf]

obama just recently railed at the banks saying he did not become president to deal with a bunch of “fat cat bankers”...

but he sure was installed to nurture a bunch of fat cat GSE managers (and there’s a contradiction in terms)

has the “Pay Czar” yet announced caps on the GSE salaries and bonuses? Where IS the “Pay Czar”? On vacation?

[Jack Black]

Ping

[reg45]

There is no pay cap for bureaucrats since they are such dedicated public servants; only for greedy capitalist oppressors.

[Mind-numbed Robot]

Could this be a means of writing off mortgages for DNC supporters, allowing them to funnel more cash back into the party?

Partly. I see it primarily as just another step to bankrupt the country and the world, creating a demand for a one world government and a super currency.

They just keep spending money where there is none. They either print it or expand credit to infinity. Either works toward their goal and together they accelerate the end.

They must get this all in place before someone with common sense gets in charge.

[Attention Surplus Disorder]

“Could this be a means of writing off mortgages for DNC supporters, allowing them to funnel more cash back into the party?”

It may be via that method, it may be via other indirect methods, but it is surely the creation of a giant slush fund and/or patronage job bank in one form or another.