Fannie And Freddie; The Bottomless Pit

Whatever the fix, the money spent will not be recovered, said Alex Pollock, a former president of the Federal Home Loan Bank of Chicago who is now a fellow at the Washington-based American Enterprise Institute. “It doesn’t matter what you do or don’t do, Fannie and Freddie will cost a lot of money,” Pollock said. “The money is already lost. There’s an attempt to try to avert your eyes.”

Quoting Sen. Gregg, here is the herd of elephants in the room, (no mention of these two in the Dodd financial reform bill):

Fannie-Freddie Fix at $160 Billion With $1 Trillion Worst Case

June 14 (Bloomberg) — The cost of fixing Fannie Mae and Freddie Mac, the mortgage companies that last year bought or guaranteed three-quarters of all U.S. home loans, will be at least $160 billion and could grow to as much as $1 trillion after the biggest bailout in American history.

Fannie and Freddie, now 80 percent owned by U.S. taxpayers, already have drawn $145 billion from an unlimited line of government credit granted to ensure that home buyers can get loans while the private housing-finance industry is moribund. That surpasses the amount spent on rescues of American International Group Inc., General Motors Co. or Citigroup Inc., which have begun repaying their debts.

“It is the mother of all bailouts,” said Edward Pinto, a former chief credit officer at Fannie Mae, who is now a consultant to the mortgage-finance industry.

(more…)

Senator Gregg On Financial Reform Bill And Social Justice

Senator Gregg was part of a panel on CNBC covering the newly passed senate financial reform bill. What follows is 4 minutes and 17 seconds that you will want to hear. Sen. Gregg covers the problems with this bill including Freddie and Fannie not being addressed, the creation of the Freddie and Fannie debacle by Congress, and the Bureau of Consumer Protection.

…and the failure to take on Freddie and Fannie is almost malfeasance of a criminal level by the Congress, I mean the fact that we would leave on the table, well it’s like having a room, not having an elephant in it, but having the entire herd in it and saying the herd doesn’t exist.

…because this is not about lending for the purposes of having strong credit and good credit going out, it’s about lending to accomplish social justice purpose. That’s what the consumer agency is all about. This is a massive expansion on the agenda of the left in the area of domestic industrial policy.

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