According to the NYT, Bloomberg and others, the government plans to announce the takeover of Fannie Mae and Freddie Mac. The proposal is to place both companies, which own or back $5.3 trillion in mortgages, into a government-run conservatorship. The chief executives of both companies will be pushed out, according to those briefed on the plan. The cost of the government’s intervention could rise into tens of billions of dollars and will probably be among the most expensive rescues ever financed by taxpayers.
According to the NYT, "both presidential nominees expressed support for the government’s plans. Senator Barack Obama, Democrat of Illinois, said as he campaigned in Indiana that not acting could place the housing market in further distress. Senator John McCain’s running mate, Gov. Sarah Palin, said at a rally in Colorado Springs that Fannie Mae and Freddie Mac have become too big and too expensive .
Senator Barack Obama, in comments to reporters in Terre Haute, Ind., said that although he supported the concept of a takeover, he would withhold final judgment until the Treasury Department released a detailed outline of the plan.
“Any action we take has to be focused not on the whims of lobbyists and special interests worried about their hourly fees,” said Mr. Obama, the Democratic presidential nominee, “but on whether it’s going to strengthen our economy, whether it’s going to help strengthen the housing market and help struggling homeowners who are also being hit by lost jobs and stagnant wages.”
Senator John McCain, the Republican nominee for president, said at a rally in Albuquerque that “we need to keep people in their homes, but we can’t allow this to turn into a bailout of Wall Street speculators.”
His chief economic adviser, Douglas Holtz-Eakin, said in a telephone interview that Mr. McCain saw the takeover as distasteful but essential. “You’ve got to do what they’re doing today,” Mr. Holtz-Eakin said. “You make every effort to insulate the mortgage and financial markets from financial distress so there’s no further harm to homeowners and businesses in general.”
Mr. McCain’s running mate, Gov. Sarah Palin, went further and called for the mortgage giants to be scaled back.
“They’ve gotten too big and too expensive to taxpayers,” Ms. Palin said in Colorado Springs. “The McCain-Palin administration will make them smaller and smarter and more effective for homeowners who need help.”"
The Chief Executive Officers who made a killing by taking imprudent risks have not been asked to pay back their ill-gotten gains, nor have they been tried in court for ruining the lives of many. The investors who made their money by supporting the unethical operations of F&F are long since gone, and they have not been asked to pay back their gains. However, the tax payers, many of whom have nothing to do with these crooks, are now asked to share the burden of bailing out these folks.
It should be kept in mind while this bailout costs the tax payers plenty of dough, the Bush government will do it the same way it has done other things, by piling the costs on to the federal deficit. Bush, Paulson, and others in the administration appear to have no moral values as they burden the future and the poor with larger deficits, which results in lower and reduced services.
Senators Obama ad McCain are singing the same tune, implying that F&F cannot be allowed to fail. Yes, when it is not your money, you can give it away freely. Further more, Obama wants to give another $100 billion in "refund checks" to the public to jumpstart the economy. Where does he think the $100 billion is lying around? It is this type of irresponsible behavior that has led us to these problems in the first place.
These bailouts should be deeply disconcerting to anyone who believes in accountability and and punishment for poor judgement and imprudent risk taking.
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