Covering Their Fannie

July 1, 2010 07:03


Why are Fannie and Freddie left out? Many of the Senate and House conferees who assembled the final overhaul bill are among the biggest recipients of cash from Fannie and Freddie, which over the years have been plagued by Democrat cronyism and corruption.

IBD Editorials

Subprime Scandal: Missing from stories about finance reform is what Democrats left out of it: a fix for Fannie Mae and Freddie Mac, which continue to bleed billions.

Nor has it been explained why the two mortgage giants at the heart of the housing crisis were excluded. A little research, however, provides answers. Many of the Senate and House conferees who assembled the final overhaul bill are among the biggest recipients of cash from Fannie and Freddie, which over the years have been plagued by Democrat cronyism and corruption.

Some of the Hill’s biggest protectors of the toxic twins and their market-distorting “affordable housing” mission landed key positions as conferees on the panel that wrote the final draft of the bank reform legislation. For example, conference committee leaders Sen. Chris Dodd, D-Conn., and Rep. Barney Frank, D-Mass., respectively raked in more than $133,000 and $40,000 in donations from Fannie and Freddie, Federal Election Commission records show.

The two lawmakers, in turn, have been the congressional chartered companies’ staunchest defenders. Leading up to the housing meltdown, Dodd insisted time and again — despite growing evidence to the contrary — that Fannie and Freddie were “fundamentally strong” and “in good shape.”

Frank maintained that “Fannie Mae and Freddie Mac are not facing any kind of financial crisis.” “The more people exaggerate these problems, the more pressure there is on these companies,” Frank griped, “the less we will see in terms of affordable housing.”

To satisfy such politically mandated lending goals, Washington-based Fannie and Freddie loaded up on subprime and other high-risk home loans. Their exposure was greater than all the major Wall Street players combined. And now they’re insolvent, with taxpayers potentially on the hook for as much as $1 trillion.

Already Fannie and Freddie’s $160 billion government bailout has topped that spent on AIG, Citigroup and other Democrat poster boys of the crisis, making their rescue the mother of all bailouts.

We can’t think of two entities more deserving of overhaul. Yet the Dodd-Frank Act doesn’t even try to reform them. This means nothing will change except the size of government’s hand in the economy. By not addressing Fannie and Freddie, economist Brian Wesbury noted “the government is taking no blame for the subprime crisis and is demanding more power over the U.S. financial system.”

Several other conferees instrumental in keeping Fannie and Freddie exempt from the new financial rules also show up among the top beneficiaries of Fannie and Freddie campaign cash (see table).

FULL STORY



Help Make A Difference By Sharing These Articles On Facebook, Twitter And Elsewhere:

Interested In Further Reading? Click Here