Posted on 05/03/2011 1:17:58 PM PDT by Jeff F
"What it basically means is: to change the perception of reality of every American that despite of the abundance of information no one is able to come to sensible conclusions in the interest of defending themselves, their families, their community, and their country.It's a great brainwashing process which goes very slow and is divided into four basic stages.The first stage being "demoralization"..."--KGB Defector Yuri Bezmenov
And they think the government can run healthcare?
Right, there was no stated guarantee, however your interpretation of the “guarantee” is somewhat at odds with the former Fed Chairman’s who testified before congress in 2004 about the implied guarantee these loans carried and the potential damage they could do if they failed. I detested Greenspan but on this subject he was precient.
They were stockholder owned businesses still they were Government Sponsored Entities by their charters and as such the “halo” of the guarantee followed. I do not criminalize anyone for raising the status from implied to sustained guarantees, I do blame everyone who was in the mill from the people at Fannie and Freddie who benefited financially, to the dealers in the collateralized loans to the originators of the loans. Everyone had to know there was a problem with them, no one cared as long as the guarnatee was implied and they were making gobs of money. This disaster was as big a national security problem than if someone had detonated an A bomb in a large city. Maybe the SEALS should be authorized to take out the culprits ala UBL because our corrupt Congress and political system is not going to go after these criminals.
Fannie was part of the government from the 1930s to the late 1960s after which it was spun off as a private firm. Freddie was created by the government around 1970 to prevent Fannie from having a monopoly and it was quickly spun off to the private sector as well.
In like fashion RCA, the Radio Corporation of America, had begun life as a government sponsored corporation around the First World War and was then sold off to the private sector.
Taxpayers aren’t obligated to backstop private firms, even when they begin life as part of the government. Greenspan could spout all he wanted about “implied guarantees” for Fannie and Freddie paper. That guarantee amounted to nothing until Dubya and Paulson decided that the taxpayers needed to be stuck with insuring the investors who had purchased Fannie and Freddie paper.
I suspect that Bush and Paulson bought into Greenspan’s dire warning that the world would end if investors in Fannie and Freddie paper had to actually bear the risk that they took on when they bought that paper. Much better to let taxpayers suffer the loss. It’s the world of crony capitalism, where gains are private and losses are socialized. But there was absolutely no legal obligation for it to have been that way.
The difference between RCA and Fannie and Freddie are quite severe. The latter two were partially under the contol of the government i.e. maximum loan values were established. Their securities were not under the oversight (sarcasm) of the SEC either. They even had a government pay scale for most workers from what I gather.
The concept their bonds carried an implied guarantee did not originate with Greenspan, in fact, it was he who railed against them long before they blew up. In the open market, the bonds never carried a coupon at par with non government backed securities trading closer to the t Bond rates in fact, but not quite because the guarantee was implied.
Paulson et al decided put the full faith of the G behind these securities just as the FDIC in the late 80’s said they would insure all losses for depositors including those above the $100K limit when unsound loans went under, the RTC was formed, and the “banking system” was close to failing. For that, there was no implied guarantee but it was done. IMO, this was the go by which began the slippery slope of deciding when to waive any boundaries on its guarantees or insurance admittedly on a far smaller scale.
I firmly believe everyone involved in this scandal should be in jail or shot. This scandal was the greatest transfer of wealth in this country ever. The citizens are on the hook for the loans which will be needed to underwrite the bad paper while wall street CEOs, Bank CEOs, Mortgage originating CEOs, Real Estate CEOs lined their pockets. I am a free market capitalist and in this case had the free market been allowed to run its course, all of these crooks would have been bankrupt but alas the political class chose whose side they are on and it surely was not the citizens, all under the guise of saving the system.
I don’t singularly blame Bush, IMO, this was above his level of comprehension, and I believe any President in charge at that time would have agreed with his own sec of treasury and Fed perhaps with the exception of Jackson. Make no mistake though, even though the players have changed, the crooks are still in charge.
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