Thursday, July 17, 2008

Fannie Mae, Freddie Mac, and the Candidates

Two candidates have campaign staff with ties to Fannie Mae and Freddie Mac, in the form of lobbyists for the lenders. Two candidates have been guarded in their comments about Fannie Mae and Freddie Mac. One has not.

Bob Barr had this to say about the lending collapse:
Oklahoma City, OK -- The latest financial crisis involving Fannie Mae and Freddie Mac, which guarantee home mortgages, demonstrates yet again how government intervention in private markets almost always comes to grief. Both Fannie Mae and Freddie Mac are nominally private, but were created by Congress and enjoy significant advantages over truly private companies, including cheaper borrowing, lower capital requirements, and an implicit federal guarantee.

As a result, the two organizations behaved irresponsibly, confident that they were “too big to fail.” They own $5.1 trillion in mortgage debt, almost half of the nation’s total. With the sub-prime lending crisis in full swing, their losses are up, their capital is down, and their ability to borrow is falling. Immediate privatization is difficult because the markets doubt the organizations can survive without government support. Insolvency and a forced asset sale would roil both the housing and financialmarkets.

These problems are almost entirely the fault of the federal government. Congress created programs to artificially inflate the housing market, established Fannie Mae and Freddie Mac to be exempt from normal scrutiny, oversight, and competition, and expanded their activities in response to the sub-prime lending meltdown. Government must get out of the mortgage business, but must do so in a way that least harms taxpayers and the economy.

Link to full Barr statement.

Today, the Washington Post treated its' readers to a rare piece of actual journalism, wherein the campaign team members for Obama and McCain who have also lobbied on behalf of Fannie Mae and Freddie Mac, are named. This is not small-change lobbying, by the way:
That payroll has cost Fannie and Freddie nearly $200 million in lobbying and campaign contributions over the past decade, according to lobbying reports and Federal Election Commission disclosures. It has also won them plenty of protection from calls for greater regulation, less federal protection, and even nationalization.

$200 million. That's a lot of money to syphon away from the core business in order to buy special favors.

McCain the Maverick. Omaba the Agent of Change. Bullshit!

No comments: