blank check, Christmas Eve, executive bonuses, Fannie Mae, Freddie Mac, Geithner, plutocracy, Treasury Department
I hope everyone had a great Christmas and that Santa brought you everything you wanted. He certainly was very good to Fannie and Freddie. Only in their case, Santa is the American taxpayer, you and me. One thing is clear, the plutocracy never sleeps, or takes a holiday. How about this for a Christmas Eve news dump?
“The Obama administration pledged on Thursday to back beleaguered mortgage finance giants Fannie Mae and Freddie Mac no matter how big their losses may be in the next three years.”
This brought to you courtesy of the accounting firm of Change, Openness, and Transparency:
“Under a law put in place before the government seized the two mortgage agencies in September 2008, Treasury Secretary Timothy Geithner had until the end of this year to increase the limit without asking Congress for approval…The administration waited until financial markets had closed on Christmas Eve to make the announcement…”
The previous cap on money poured down the Fannie and Freddie black hole was a combined $400 billion, $200 billion each, of which only(?) $111 billion has been used so far. So why change it to “unlimited?” Here’s an explanation:
“If the Treasury is removing the cap, they obviously expect the losses to skyrocket (even though they deny this publicly). This could be happening because the Treasury already knows how much Fannie and Freddie are going to declare as losses this quarter.”
Santa (again, that’s you and me) was also very good to Fannie and Freddie executives:
“But even as the administration was making this open-ended financial commitment, Fannie Mae and Freddie Mac disclosed that they had received approval from their federal regulator to pay $42 million in Wall Street-style compensation packages to 12 top executives for 2009…The compensation packages, including up to $6 million each to Fannie Mae and Freddie Mac’s chief executives, come amid an ongoing public debate about lavish payments to executives at banks and other financial firms that have received taxpayer aid. But while many firms on Wall Street have repaid the assistance, there is no prospect that Fannie Mae and Freddie Mac will do so.”
That’s $6 million each for CEOs whose companies have lost a combined $200 billion. Nice work if you can get it, and you can get it if you happen to have the Treasury Secretary on speed dial.
The Agonist sums up the entire cluster____ about as well as I’ve seen it:
“We are getting very used to watching the federal government operate with only the sketchiest information on what it is doing. Most everything seems to be done behind doors and in secrecy. That’s what makes this brief announcement about Fannie Mae and Freddie Mac so troublesome. When the federal government starts talking about unlimited guaranties to cover future losses, our biggest worry ought to be that whatever large number we can contemplate is included under the word “unlimited”, the government has an even larger number in mind.”
Government of the wealthy and powerful, by the wealthy and powerful, and for the wealthy and powerful. Some things never “change.”