The central planning will continue until the economy improves

March 25, 2013

… or, Government which has proven itself incompetent in pricing mortgage risk to continue indefinitely in the business of pricing mortgage risk.

The inertia of central planning:

[…] the future of housing finance in this country seems to be coming down to two taxpayer-backed concepts. One is the status quo, with Fannie Mae and Freddie Mac continuing to back the vast majority of mortgages. The other is a newly conceived public guarantor with some of the same problems that got Fannie and Freddie into trouble. Let’s begin with the status quo. The taxpayer rescue of Fannie and Freddie in September 2008 has cost $137 billion so far. While this has been paid down from an initial $187.5 billion, taxpayers aren’t likely to get their money back anytime soon. Last fall, the regulator charged with overseeing Fannie and Freddie estimated that the taxpayer bill for the companies could be $200 billion by the end of 2015.

Remember when University of Wisconsin professor Menzie Chinn mocked Sarah Palin for calling Fannie and Freddie “too big and too expensive to the taxpayers?”  Who’s the idiot now?

[The alternative plan’s] details differ from the broken system that the commission aims to replace, but there are many similarities. For example, the plan requires the government to be sophisticated at pricing the risk in the mortgages it will back. If it isn’t, the premiums it receives will be insufficient to pay future loss claims. This sophistication is not a given. Neither Fannie nor Freddie has been adept at setting an appropriate price for their guarantees — that’s why they’re choking on more than $100 billion in losses. Why would a new public guarantor do the job any better?

And what would central planning be without crony capitalism? The corrupt, bankrupt government agencies made some politically-connected appointees fabulously wealthy:

Among the retirees receiving pensions courtesy of the taxpayer are Franklin D. Raines, Fannie Mae’s former chief executive; J. Timothy Howard, the company’s former chief financial officer; and Leland C. Brendsel, former chief executive of Freddie Mac. All three men were ousted from their companies amid accounting scandals — Freddie’s in 2003 and Fannie’s a year later. All were paid handsomely through their tenures. Between 1998 and 2004, for example, Mr. Raines received $90 million in compensation, regulators found. Mr. Howard received $30 million over the period. When Mr. Brendsel left Freddie Mac, he was earning $1.2 million a year in salary. Even so, Mr. Raines receives a pension of $2,639 from taxpayers each month, the documents show; Mr. Howard receives $4,395 and Mr. Brendsel $8,039. Requests for comment from the former executives’ lawyers were not returned. The documents show that taxpayers spent $11 million last year on medical costs for 1,392 Fannie and Freddie retirees. And from September 2008 through 2012, taxpayers also spent $114 million for legal bills racked up by former executives and directors testifying in lawsuits relating to the accounting scandals or financial crisis inquiries.

14 Responses to The central planning will continue until the economy improves

  1. IP727 on March 25, 2013 at 5:58 am

    The floggings will continue until morale improves.

  2. Jim,MtnViewCA,USA on March 25, 2013 at 7:21 am

    If Franklin Delano Raines was a Republican or if he had a white skin the media would be unrelenting in pursuing him.
    Dem financier James Johnson is another name to investigate.

  3. allie on March 25, 2013 at 9:05 am

    These are the same type of “smart” people who will now be in charge of our health care. Scary thought isn’t it?

    • Jim,MtnViewCA,USA on March 25, 2013 at 9:56 am

      Well, yes!
      “Democrats in the Gang of Eight– the Senate’s bipartisan working group on immigration reform–have taken the first step towards extending Obamacare to illegal aliens who will be granted legal status under the reform. All Republicans in the Gang opposed the move. It’s a potential poison pill, with massive budgetary implications.”

      • IP727 on March 25, 2013 at 10:23 am

        Let’s hope it’s poisoned to extinction.

      • Evan3457 on March 27, 2013 at 12:41 am

        …and completely expected. The whole purpose of Obamacare was to defund health care for old people, especially middle and upper-class white people, so as to fund health care for illegal aliens, a permanent Democrat-voting class.

  4. Ripley on March 25, 2013 at 5:46 pm

    The taxpayer rescue of Fannie and Freddie in September 2008 has cost $137 billion so far.

    Good investigative work wc. See if you can find out who was the president in September 2008 who signed off on this crap deal, and what party he was from. If you find out let us know, because the real fiscal conservatives that read this blog would never again want to support candidates from a party that was that fiscally irresponsible. Darn it, I wish I could remember.

    • bunu on March 26, 2013 at 8:53 am

      ”real fiscal conservatives that read this blog would never again want to support candidates from a party that was that fiscally irresponsible”

      Yeah, batshit crazy irresponsible stupidity like refusing to seal the border, right Ron Paul? Isn’t that right you self-righteous, baby-killing hypocrite?


      Ron Paul has many delusional/ignorant children providing cover for his liberal insanity.
      Ripley is just the local crackpot kiddie who drank the whole punchbowl of Paul’s koolaid.

      • Matthew on March 27, 2013 at 5:07 am

        Your argument would have more weight if you weren’t indulging yourself in an eye-bulging, spittle-flecking rant. Like your other shrill sock puppets.

    • W.C. Varones on March 28, 2013 at 6:16 am

      That would be President Obama and Timmy the Tax Cheat in Dec 2009.

  5. Mildred Smith on March 27, 2013 at 5:55 am

    U.S. stock rally lifts Dow to record close

    ‘U.S. stocks rallied Tuesday, with the Dow Jones Industrial Average finishing at a record high and the S&P 500 Index less than 2 points of its all-time closing high, following economic data that showed improvement in home prices and manufacturing. “The market is shrugging off Cyprus, shrugging off mixed economic data,” said Phil Orlando, chief equity strategist at Federated Investors. “The market is doing fine is the short answer,” he added.’

    Socialist Bastards!

    • IP727 on March 27, 2013 at 8:03 am

      Tulip mania and south sea bubble sucker play.

      Will numbnuts be willing to take credit when the market falls on it’s ass?

      • Mildred Smith on March 27, 2013 at 4:40 pm

        President Palin will be blamed.

  6. Fred on October 13, 2013 at 5:34 am


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