Another Reason To Keep Healthcare In The Private Sector; Fannie & Freddie

I just do not have the financial background to completely understand the incestuous nature of the different government agencies and their connection to each other and Wall Street, nor do I have the time to educate myself on the various workings of saleable tax credits, but I do know that after reading the following article, I am 100% sure that turning any portion of healthcare over to this government would be SUICIDE.

Fannie Mae lost $37.9 billion in the first six months of 2009.”

Keep calling and emailing your non-reps. and remind them of Fannie and Freddie!  Then, if you can, make sure you are on the Capitol Steps on Thursday, November 5th at noon to meet Michelle Bachmann and look your non-reps. in the eye while you tell them that what they are doing is un-Constitutional, borders on traitorous behavior, and will, at the very least, get them dethroned and derailed from the piggie trough.

From the Wall Street Journal:

Goldman Looks to Buy Fannie Tax Credits
Treasury Lurks as Spoiler as Political Climate Favors Main Street’s Benefit Over Wall Street’s

By DAMIAN PALETTA

Washington

Goldman Sachs Group Inc. is in talks to buy millions of dollars of tax credits from government-controlled mortgage giant Fannie Mae, but the potential deal is running into opposition from the U.S. Treasury, which could block the deal.

A sale would bring some needed financial respite to Fannie Mae. But the administration is leery about approving a deal that would help Goldman reduce its tax bill, given the animus held by many lawmakers toward big Wall Street firms in general and Goldman in particular.

The Obama administration is looking at the deal with a critical eye and could block it. Goldman, meanwhile, is hopeful it could win approval this week.

“Treasury is reviewing and will not let it proceed unless it is clearly in the taxpayers’ interest,” spokesman Andrew Williams said.

Fannie Mae and its regulator, the Federal Housing Finance Agency, declined to comment.

“Fannie Mae is owned and controlled by the federal government,” said Goldman Sachs spokesman Michael DuVally, who wouldn’t confirm the company was in talks with Fannie about the credits. “The only basis on which approval for any transaction would be given would be if it was clearly in the taxpayers’ best interest.”

Precise details of the deal couldn’t be learned. Some on Wall Street think Goldman could buy $1 billion of the tax credits, which would allow the bank to offset a portion of its profit. It is unclear how much of a discount Goldman is offering to pay. One person familiar with the potential transaction said Goldman could line up other investors for the deal as well.

Nearly every major business decision at Fannie Mae and Freddie Mac is vetted or directed by the government. Officials at both firms have complained about their contradictory missions — they are at once private companies and tools of public policy.

The Goldman talks are emblematic of these conflicts: A deal that could help Fannie Mae might also be politically unpalatable.

The Treasury Department has purchased $45.9 billion in preferred stock in Fannie Mae since it took over the company last year to pump money into the firm, giving taxpayers a substantial stake in the firm. (emphasis mine.)

The tax credits are an incentive in federal law to spur investments in low-income housing. The law allows investors to receive tax credits for financing qualified housing developments. These credits tend to be drawn out over periods such as 10 years, and are attractive to companies that know they will be profitable during that span.

Fannie Mae, for its part, would be able to unload credits that are weighing on its balance sheet and forcing it to take losses. Selling them would bring earnings into the firm that might offset the amount of money Fannie Mae has to borrow from the Treasury Department. It could also help free up Fannie Mae’s balance sheet so the company can finance more housing loans.

The Federal Reserve waived normal rules to allow Goldman and Morgan Stanley to quickly become bank holding companies last year, protecting them from some of the financial-market trauma that befell Bear Stearns and Lehman Brothers. The government injected $10 billion into Goldman through the Troubled Asset Relief Program. The bank was also helped by the bailout of American International Group Inc., through contracts Goldman had with the giant insurer.

The Treasury has invested a combined $96 billion in Fannie Mae and Freddie Mac since the companies were taken over in September 2008, and it is unclear when either company might be able to repay any of the money. Fannie Mae lost $37.9 billion in the first six months of 2009.

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3 Responses to Another Reason To Keep Healthcare In The Private Sector; Fannie & Freddie

  1. Tim says:

    Totally unrelated, but I am one week away from a Mai Tai on the beach in your lovely state. The kids are plenty excited.

  2. Dr. Dave says:

    Fannie and Freddie, the Post Office, the student loan business. I could go on and on. This just can’t happen. If it does, we truly are screwed.

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~Pres. Thomas Jefferson~
"The country is headed toward a single and splendid government of an aristocracy founded on banking institutions and moneyed incorporations and if this tendency continues it will be the end of freedom and democracy, the few will be ruling...I hope we shall...crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our government to trial and bid defiance to the laws of our country.  I sincerely believe that banking establishments are more dangerous than standing armies."

~Pres. Thomas Jefferson~

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