I Must Be Right, Look Who’s Upset!!
In the past few blogs, I’ve noted that—despite all of the angry rhetoric and BS talk aimed at Fannie and Freddie--the cowardly Congress has lacked the courage to make any significant budget decisions. In addition, a call it did make likely breathed life into Fannie and Freddie by using them as a “pay fors” to fund the two month extension of the payroll tax, a legislative action completed at year’s end.
No doubt, that two month relief will be extended to one year (requiring more “pay fors”), when Congress next takes it up.
The unique “homeownership tax”--which F/F must stick on their lender customers--in turn will be transferred to consumers in the form of higher mortgage costs. (The returning revenue skips Fannie and Freddie and flows right to the US Treasury.)
Now both Ed Pinto and Gretchen Morgenson, he of the make believe “subprime numbers” which he alleges Fannie bought in the 1990’s (although those loans never defaulted) and she the author of a book which employs Ed’s fantasy figures (see Joe Nocera’s evisceration of Pinto—his AEI colleague Peter Wallison—and Pinto’s data, in the 12-24 NYT), have now awakened to the fact and damned Congress for the resurrection action.
For people who claim to be so smart, Ed and Gretch are very naïve when it comes to Washington politics, since once the congressional vampires start supping on the former GSEs’ blood (or their revenue), the Congress won’t stop. Watch for the fees to be perpetuated and likely grow, as demands for bipartisan “pay fors” inevitably increase.
The bottom line here is that congressional greed always will trump ideology. So what if some revenue raising action keeps the evil twins alive, Congress can pretend it is doing something right by periodically whacking Fannie and Freddie, ignoring they also are hitting the American home buyer.
Score: Maloni-1, bad guys-0.
It Was the Democrats, Clinton, Frank, Pelosi or…W?
When the Raging Right picks its enemies list of those responsible for whatever it is about Fannie Mae or Freddie Mac which angers them that day, inevitably they bang away at Democrats.
D Administrations or D’s in Congress wind up getting smacked by the WSJ, Heritage, AEI, Cato and the like. But those conservative institutions seem to mince and dance around their last President, George W. Bush. He and his Administration leaned on Fannie and Freddie to do more and goosed up the companies’ affordable housing goals while entwining the two in the Bush “ownership society.”
For those with temporary amnesia, I want to provide a link to President Bush’s famous 2002 Atlanta housing speech, where he called on the nation and the federal government to do a much better job and boost homeownership rates for everyone, especially black and Hispanic families.
Now if only Bush’s SEC, Alan Greenspan’s Fed, the Comptroller of the Currency, the FDIC, as well as the GSE regulator, had their heads up—instead of stuck in an institutional body cavity— they would have nopticed that Wall Street was going around the Fannie and Freddie underwriting systems and using their own looser standards to underwrite mortgages for many poor and minority families.
President Bush—and the nation—would have been far better off had the Wall Street slicksters never put so many low income families into loans they could ill afford. (Fannie and Freddie made a huge mistake when they later bought those crap mortgage backed bonds, but that doesn’t erase the sins of those investment banks which created them or the federal regulators who permitted their formation.)
Also, had the President not chosen Mel Martinez as Secretary of Housing and Urban Development (HUD) and Alphonso Jackson as Under Secretary (both of whom Bush, produly, introduced to the crowd in Atlanta that day), the President might have been more successful.
Martinez was a nice man, but a housing lightweight who couldn’t leave tracks in wet mud, while Jackson—a few years into the job--barely avoided jail time when he was discovered manipulating HUD contracts for political reasons.
Enjoy the former President’s rhetoric and see if you believe that those remarks contain any DNA from 2008’s financial debacle and mortgage market collapse.
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Overcome by the Spirit of Christmas
And to what to my wondering eyes should appear, but a fairly written, almost objective article in the Dec. 27 online Wall Street Journal.
I don’t want to get too carried away with this fact, but here is the link for all to read. Speaking of sleeping at the switch, I wonder which WSJ editorial elf let this one slip by?
Tomorrow’s Iowa Caucus
Here’s rooting that tomorrow’s GOP Iowa caucus produces another “flavor of the month” winner, maybe Rick Santorum or Ron Paul, to force the Republicans to dither for some additional weeks and months before they reluctantly turn to Mitt (“Mittens”??--see Maureen Dowd) Romney as their standard bearer.
Hopefully distant finishes in Iowa will sap whatever life there is in the candidacies of Michelle Bachmann, Rick Perry, Newt Gingrich and whoever else is seeking the GOP presidential nomination, so some of the cacophony—especially which candidate spends more time in church--will subside.