All The Buzz Today Is About Fannie & Freddie

August 21, 2008

The Facts

“We are all over this today” ; CNBC’s comment several times this morning and its only 11:00 AM ET. And, this story is referenced with just about every other topic they are covering today. Without fail, when discussing this topic, bailouts are a big part of the story, as if that surprises anyone.

My View

The Fannie & Freddie problem has been headline news for well over two months now, right along with the other financial institutions problems. A superficial Congressional bailout bill has already been passed and all that did was give a few politicians something to publically brag about, along with buying time for “behind-the-scenes” posturing and deal-making. And there’s one thing we can all bet on; deals are being made to insure personal fortunes aren’t lost and personal fortunes can be made, all at the expense of the taxpayers. The trick facing the deal-makers is how to construct the bailout so it doesn’t appear so bad to us taxpayers (as if that would really matter to them). What I fully expect is something that is “temporary” to be “reimbursed” somehow at a later date; a date far enough out so that the crooks are out of harms way and any mention of it then will be met with “that’s old news-we’ve got to look to the future”.

Whether or not the CEO’s of these two companies (Mudd & Syron) should be held accountable, and maybe punished, is already being debated. Amazingly, but not surprising, is there are those who are defending them (video), such as Howard Glazer, a mortgage consultant, whose clients include Fannie & Freddie (it didn’t appear Glazer was overly pleased the latter was pointed out). He’s blaming the stock meltdown of the two companies on “rumors” of bailouts, portraying Mudd and Syron as victims. Bailout RUMORS? Why doesn’t this guy just hang a sign around his neck that says “PR Department for Mudd & Syron”? But I notice he doesn’t deny that a total bailout is impending. His last comment exposed his forked tongue. He says that without Fannie & Freddie there is no mortgage market, and the federal policy makers should recognize that. Where’s the capitalistic view of leaving businesses alone and allowing them to fail or succeed on their own? (Oh, yea, that’s right, I simply forgot; that doesn’t apply to big businesses.) He’s absolutely wrong in that there would be no mortgage market. Although mortgage rates would probably be fairly high for a while until competition sets in, there’d be a “gold rush” mentality of people opening up mortgage markets. (By the way, I’d be curious to know what kind of “advice” Glazer gave during his “consultations”.)

As for Syron (Freddie Mac paid the $100,000 lawyer’s fee for negotiating his contract with Freddie) & Mudd, who have personally made over $50 million between the two of them over the past two years, my question is if the buck doesn’t stop with them, then who? Somehow or another I feel certain it’s either us greedy taxpayers or “those damn liberals” who are responsible, and “that’s where the buck should stop”. The fact is, all this is turning into is another “privatized profits with socialized cost” program, just like Bear Stearns and others.