Tuesday, September 09, 2008

Spanking Fannie

"Depend on it, sir: Nothing so concentrates the mind like the prospect of being hanged in a fortnight." – Samuel Johnson

Nothing yet from Dodd on spanking Fannie.

In the business world, the prospect of failure has precisely the same effect. In a failure free environment, we can forgive ourselves everything. Failure never touched the souls of the nincompoops responsible for the home financing fiasco because they always knew deep in their bones that, if they failed, their generous Uncle Sam would come to their rescue and pick up their tab.

And that is exactly what has happened with Freddie Mac and Fannie May.

The so called “rescue” of these frauds by the federal government is itself defective because there is no failure component in the rescue effort, no element of fear that would restrain future frauds from following the same path to taxpayer perdition. Every single governmental program should be blessed with a fear factor.

The chief problem with government and quasi-government programs is that their administrators need never fear the prospect of being hanged in a fortnight. The new Freddie and Fannie Ponzi scheme is to be built on the same platform, with the same shoddy construction materials by the same administrators as the old crew. The truth is: Freddie and Fannie have failed – spectacularly -- in all but the consequences of failure.

But have no fear, according to the chief political writer for the Hartford Courant, soon plan to examine “the issue.”

What issue?

The federal government has now taken over Fannie and Freddie; which is to say, the foxes that have caused this mess, including the US Congress, are using the assets of the chickens (i.e. taxpayers) to pay for their bungling.

Dodd will not be examining that issue because, according to the Courant, “Dodd didn't actually say he opposed the government takeover of the mortgage giants. But he cast suspicion on the administration's intentions and timing. He also suggested Paulson misled him and others when he had said he didn't intend to take advantage of the Treasury Department's recently won abilities to buy into the mortgage companies.”

Apparently, the feds didn’t give the chairman of the banking committee a heads-up on the takeover.

That’s the issue.

How precious!

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