On Fannie Mae and Freddie Mac, Bob Barr doesn't hold back

Perhaps an issue has fallen into the lap of Bob Barr that will give his little-noticed presidential campaign some traction -- especially among libertarian-minded Ron Paul backers who have not exactly flocked to Barr's banner.

The issue would be the anticipated federal rescue of the tettering mortgage behemoths Freddie Mac and Fannie Mae.

The two major-party presidential candidates, Barack Obama and John McCain, both expressed general support for the move today, while reserving the right to quibble over the yet-to-be officially unveiled details.

But Barr, not surprisingly, will have none of all this. And he made that crystal-clear in several sharply worded quotes that were part of a release his campaign has released:

Congress set up the taxpayers for big losses when it established these quasi-government agencies to subsidize the housing industry, and then earlier this year voted to approve direct federal support for them. Policymakers should learn from the latest financial disaster and say never again. ...

... First, government subsidizes an industry. Then, after the industry crashes, government bails it out!  The one factor that never changes is: the taxpayers lose. ...

... It is time to say no more.  Fannie Mae and Freddie Mac need to be privatized and sold off.  And Congress must stop treating the federal government like a national soup kitchen for businesses in trouble.

Just asking: Who is the "agent of change" on this matter?

-- Don Frederick

Photo credit: Associated Press

Comments

[DenisL]

Thank goodness someone running for office is sane!
This is sheer madness to expect the taxpayers to bail out the Fannies AND in the process keep housing prices so darn high such that the average family can not afford to buy them.
And that is exactly what the Government will do when it takes over, continue to prop up the prices of homes so that the bulk of America can not afford them.
Just plain and simply, stupid and mean.
And it will all be done in the name of helping Americans when all it really does is help the big banks and China.
Please just let it go broke, clean out the speculators and let the frugal savers be able to afford a house again.
Has no one but Barr ever heard of a free market?
Why do the rich hate the poor so so much?
How come the rich bankers have so much clout in Washington that they can take tax money and put it in their own pockets, while at the same time deny the average working man a home? When did it come to this?

[anonymous]

Fight fIight fight, and the American public deplores this. The Bush administration needs to bring our troops home!

Peace, brothers and sisters, peace.

Obama.

[Economan]

The government hasn't lost a single cent on either of these two firms yet, and is likely to make out VERY WELL if the papers are right about how they're going to support these two firms. It sounds like taxpayers are going to be well compensated for putting a very small amount of capital (roughly 10 billion) at risk.

[Sheldon]

Obama warned for some time that the Bush policies of lax regulation were encouraging bad lending policies in the housing market by institutions such as Fannie Mae. Barack Obama as president would not allow tax payers to bail out bad lending practices by greedy management.

[acarponzo]

Kick some butt Barr! Failure is part of life and a human right. Government + private enterprise =corruption. Privatize and more on!

Http://www.boppoll.com

The major candidates are taking their bops on the chin!

[Economan]

What bad lending practices? Nearly all of the losses at these 2 firms were in their affordable housing initiatives, which were not voluntary programs for either. This was part of their congressionally mandated mission. What most Americans don't realize about these firms is that they would not have been in the low grade affordable housing mortgage market if they hadn't been pushed their by both Dems and Republicans. This wasn't a choice they had. And both Obama and McCain were in favor of that mission.

[Tharms]

Who is the fantastic Sam who thinks that 10 billion dollars is a very small amount of capital to risk? Where do these idiots come from? Let them gamble with their own money.

[Liah]

Same old thing. Corruption increased for the last 12 years and we REALLY have to do something about it.

McCain won't make any difference, he belong to the same crowd. He, himself said that doesn't have any clue how the US economy runs.

I don't care about someone else personal choice; "should I abort or shoudn't", that is a personal decision between she and her own God!
God gave to each one the freewill to choose, and remember people "Who ever is free of sin...stone"

What really matters is the ECONOMY and stop spending in wars. PRIORITY FIRST !!!

We have to feed our kids!

[Andrew Kenneth]

You don't get it Fannie Mae and Freddie Mack are too big 5 trillion dollars as a guaranteur is too much money,
If they didnt do this the shockwaves would be felt all across the world.

[Economan]

"Who is the fantastic Sam who thinks that 10 billion dollars is a very small amount of capital to risk? "

For a portfolio of $5 trillion, a cash infusion of $10 billion is very, very small, considering that it will give the government a senior claim on assets. That's essentially equivalent to buying the rights to Freddie and Fannie's entire asset holdings for LESS THAN 1 cent on the dollar. Yes, there's more risk than if they were buying the actual assets, but still, buying the rights for less than 1 cent on the dollar is absurdly cheap for a senior preferred stock holding. Also, consider that firms like Citigroup and HSBC have already burnt through about $10 billion EACH, and relatively speaking, the cash infusion to the GSEs is comparitively small.

[Zak Carter]

The differences between McCain and Obama are minimal, when you consider that both believe big government can save you from yourself, and that we can save other nations from themselves as well. I will not play along with the game of lesser of two evils, as I believe that is part of what has plunged this nation into the mess we find ourselves today.

Please visit bobbarr2008.com and give liberty a voice in the Presidential debates and beyond.

[Kim]

I'm no economist or political scientist, but the government just seems to be getting bigger and bigger and more into debt. I doubt things would have gotten this bad if FM and FM were based on a free market system rather than a system of government intervention and subsidies. I miss Ron Paul being in the race, but I'm glad Barr is speaking out against this bailout.

[Norm]

if $10KKK is such a small amount and the taxpayers will make a profit then why wont the private sector loan them the money?

[Gene]

Economan, you are correct in what you say - it is a great deal. If I had $10 billion, that might be where I would put it, but there is a huge difference between me as a private investor spending my money and the federal government (once again) spending my money.

In what way is this action justified by the explicit definition of the US government? How is this even implied by that definition? I've got some debt I'd like to be rid of; should I go to the government to take care of that? What's the difference between the FMs' requests and mine (besides the amounts)?

If I understand you correctly, you are basing your judgment on whether or not the government should do this not on how it will be paid for or what the effects of the federal government owning the senior rights to their assets (people's homes) will be, but on how good of an investment it is for the federal government. How does that come into play at all? Since when did "by the people, for the people, of the people" become "by/for/of the profit margin"?

I don't believe the government should save people or companies from themselves. Once we stop doing it, we will soon stop having to do it. The option will be off the table and responsible management will once again be a requirement for success.

[Jane]

Those who think the bailout should occur because of shockwaves across the world.......yes, it would be extremely bad for maybe a year (yes, even a deperssion) then things would get better. The prop-ups will prolong the agony and make the fall much much worse (possibly dragging it on for years if not decades). Which would you rather have?

[Jeff Fisher]

Google Al Gore Jeff Fisher Word Peace

[Charles Hill]

According to the New York Times, Democrats blocked Bush’s Fannie Mae and Freddie Mac reforms so low income people with bad credit could buy houses.
''These two entities -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, and the less we will see in terms of affordable housing.'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee.
http://strategicthought-charles77.blogspot.com/2008/09/democrats-blocked-bushs-fannie-mae-and.html