POWIP Piece of Work In Progress – Former Abode of Dan Collins

Latest News on Fannie and Freddie

So far, the American taxpayer has been on the hook for $130 billion (and growing) to bail out the "struggling mortgage giants." Yesterday, FHFA's Acting Director was "grilled" (in the parlance) in the House Financial Services Subcommittee on Oversight and Investigations on a variety of subjects, including whether it was appropriate to grant the administrators of the programs salaries of up to $6 million per annum, and whether it was appropriate for taxpayers to have to foot the legal bills of past executives:

Since the government takeover, taxpayers have paid more than $160 million defending the two firms and their former top executives. About $24.2 million of the total went to defend former Fannie Mae Chief Executive Franklin Raines and two other senior executives, according to the committee.

The panel's chairman, Texas Representative Randy Neugebauer, questioned the decision to pay fees for the three executives, who he said earned more than $150 million collectively from 1998-2003.

"I think all of my colleagues can agree that these fees are not 'reasonable' given the mounting taxpayer exposure, the delay tactics of the defendants and the fact that many of these securities-related lawsuits have no end in sight," Neugebauer said.

Meanwhile, OMB Director Jeff Lew was getting pounded by Paul Ryan and Jeff Sessions, among others, over his absurd representation of Obama's budget as "balanced."

At Slate, Bethany McLean doesn't believe that Fannie and Freddie are going away:

But before Fannie and Freddie's detractors clink champagne glasses, they should know that the administration's plan—which it was required to produce under last year's Dodd-Frank financial reform—makes no decisions of real consequence. You don't have to be a cynic to conclude that Fannie and Freddie aren't going anywhere.

The administration plan proposes certain steps to coax private capital back into the mortgage market. (As things stand today, there are very few government-free home sales; Fannie, Freddie, and the Federal Housing Administration guarantee more than 90 percent of new mortgages.) For example, the plan would reduce the size of the loans Fannie and Freddie can buy in high-cost areas from $729,750 to $625,500. It would also increase the size of the down payment that Fannie, Freddie, and the FHA require and raise the fee these three entities charge. The purpose of these proposed changes is to make it easier for private firms to compete. "As the market begins to heal and private investors return," the authors of the plan pledge, "we will seek opportunities, wherever possible, to accelerate Fannie Mae and Freddie Mac's withdrawal." But what if private capital doesn't want anything to do with most of the American mortgage market? And even if some private capital does return, the decrease in loan limits and the increase in down payments are "clearly not enough to 'wind down Fannie and Freddie,'" Amherst Securities concluded in a recent report.

Considering the administration's policy of rewarding failure for purposes of redistribution, I'm inclined to believe her.

It goes beyond that, though. The real taxpayer exposure is much higher, and despite the government's having bailed out and seized control of Fannie and Freddie in 2009, the government argues that the records are not subject to FOI requests. Such cover-ups on the part of the administration have caused Issa and company to adopt an aggressive posture towards investigation, with the result that liberal activists are organizing to impugn the investigators, even as FOIA requests are submitted to political appointees for approval, causing them to be delayed or ignored at the whim of those appointees.

Belatedly, even ABC has finally come to the conclusion that the White House is granting or denying access to reporters based on their affiliations. Of course, if the MSM hadn't been so deeply in the tank for Obama, they might have established a different sort of relation from the get-go.

You know what else isn't going away, though? The Kermit Gosnell story.

Dan Collins

Dan Collins is a dude who blogs. He used to blog elsewhere. Now he blogs here.

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