The White House capitulated on the mortgage bailout bill, which now will become law, thanks to the “gullible” Treasury Secretary, Hank Paulson, who got Bush to cave in to the bill after earlier threatening a veto. Daniel Mitchell explains how this was a political blunder, but also part of a disturbing pattern on Capitol Hill. The mortgage bailout bill will spend many billions of dollars to bail out the government-backed mortgage giant Fannie Mae, which engaged in massive accounting fraud to enrich the liberal power-brokers who run it.
In the Washington Post, former Treasury Secretary Lawrence Summers argues that reform of government-backed mortgage giants like Fannie Mae is needed to reduce the risk that taxpayers will end up having to bail them out yet again in the future. Possible reforms include breaking Fannie Mae into “government and private components, the latter of which would be sold off in multiple pieces.”
Of course, Fannie Mae’s high-priced lobbyists would fight tooth and nail to prevent this from ever happening. Fannie Mae has never hesitated to use dirty and underhanded tactics to fight reform. Congressional leaders in the pocket of Fannie Mae blocked attempts to amend the mortgage bailout bill to place limits on Fannie Mae’s ability to lobby against reform in the future.
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I just thought of something, you know how everyone is pissed about having to pay for other peoples reckless finances? think about the poor bastards who’s homes have allready been forclosed on, they now have to pay so some one else can keep their house.
The Mortgage Bailout’s concept is often criticized because many feel that people who were irresponsible to get themselves into bad loans should not be bailed out. Others feel that they should be bailed out because lenders are often very deceptive in their practives. Yet, others feel that a limited bailout option should be available - whereas assistance is provided, but not a complete walk-away option.
In this current economic situation, there needs to be some kind of viable way to repair credit lines and get the economy moving again. Treasury Secretary Paulson’s Troubled Asset Relief Program, or TARP, doesn’t seem to cover enough. The FDIC’s chairperson, Sheila Bair, has set up her own strategy; a $24 billion plus plan for the 1.5 million homeowners facing foreclosure. Her idea is to give a stimulus of $1,000 to lenders for each renegotiated loan to owners in danger of heading to foreclosure. In the event of default, the FDIC will take on up to half of the burden. Paulson hates it, straight away, and proclaims that its just more spending that will lead to the bankruptcy of the FDIC. Some others view Bair’s actions as one of the first real attempts to help repair credit of the banking system and get cash flowing again.
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