Thursday, April 22, 2010

Silence on Fannie and Freddie

It's good to learn that General Motors and Chrysler are doing well and are paying back their bailout loans, made through the federal government's TARP fund.

You'd think, from the MSM coverage, that all is hunky-dory. Why, according to the administration, the total cost of TARP, the Troubled Asset Relief Fund, will only be $127 billion.

The administration expects the total cost of TARP to be less than $127 billion, though Mr. Allison [from the US Treasury] said improvements at American International Group Inc. and General Motors Co. could change that figure.
Erm. So why aren't we hearing anything about Fannie and Freddie, the government-sponsored mortgage giants, once the ATM of former administration officials, and now in government receivership?

OK, here's a report from Peter J. Wallison in The Wall Street Journal.

Losses at Fannie and Freddie are expected to be $400 billion. The latest estimate from the Congressional Budget Office is $381 billion. But maybe the Obama administration knows something we don't know.

Last Christmas Eve, Treasury removed the $400 billion cap on what the government might be required to invest in these two GSEs in the future, and this may tell the real story about the cost to taxpayers. In typical Washington fashion, everyone has amnesia about how this disaster occurred.

Yes. If you talk to your liberal friend, amply informed by The New York Times, he will have very little grasp of the Fannie Freddie debacle.

And that's the way it's supposed to be. Don't inquire too much about the many government messes that liberals have dreamed up over the years and are too proud to admit failure. Don't inquire too much about the bottomless pit that we taxpayers are committed to dig for the politicians who promised affordable housing for people that couldn't afford it.

And what about the bondholders at General Motors and Chrysler that got haircuts? We are not talking about the stockholders. The are risk-takers. We are talking about widow-and-orphan bondholders. The happy-talk news items and GM and Chrysler aren't talking about that. They are talking about GM and Chrysler repaying the government, not the bondholders.

There's a quote from Ringo Starr, the Beatle, that seems to address all of this. According to the philosopher from Liverpool:

Everything the government touches turns to crap.

No kidding.

1 comment:

  1. We live in a era of big government. The government will admit to doing no wrong. The government will lie. It's no longer a goverment of the people.

    We got here because we went about our lives without paying attention. The leftists certainly were. They slowly took over our institutions, starting with our schools. Now everyone is a victim entitled to some goverment handout.

    It's a sad day in America, and we don't even fly our flag over our Haiti relief camp, as if we're ashamed. Well, we know who is ashamed of our country.