Fannie Mae and Freddie Mac

As I watched the meltdown of Fannie Mae and Freddie Mac last week, I was reminded of the old adage that worst words you can hear in America are "I'm from the government and I'm here to help".

Why?  Because government is largely inept, incompetent, and unable.  Government could not plan a fart after lunch at Taco Bell .  And when government gets into areas that would be best left to the private sector, it's one disaster after another.

AMTRAK. Conrail. US Postal Service.  Flood insurance.  FEMA. Fannie Mae.  Freddie Mac.

The fact is that while Fannie Mae and Freddie Mac are ostensibly "private corporations", everyone on The Street (that's Wall Street) believes there is an implicit guarantee behind them provided by you and me -- the United States Taxpayer.  It should be noted that there is no such guarantee written in law.  But as a former boss of mine used to say, "perception is reality".

Of course, all the while that Freddie Mac and Fannie Mae have backing trillions in loans in convoluted, distorted, over-leveraged, and corrupt market, the US Government has been sitting back and letting massive fraud -- on a scale an order of magnitude greater than Enron -- go on at this so-called "private companies".

Fannie Mae's managers -- which have included such stalwart lending geniuses as Clinton ratfuckers Harold Raines and Jaimie Gorelick, among others -- enaged in a calculated and massive accounting fraud scandal that can only be described as thoroughly and fundamentally despicable.

You and I will pay for that scandal now.  But it gets worse.

You see, led by Chris Dodd -- Chairman of the Senate's Banking Committee -- the United States Congress just passed a massive bailout scheme that would transer hundreds of billions of dollars in bad debt to Fannie Mae.  Hundreds of Billions of dollars in bad debt issued by companies like Countrywide Home Mortgage, which just so happened to give Chris Dodd a real sweatheart of a loan deal a couple of years ago.

And then there are the "off the book" liabilities held by Fannie Mae and Freddie Mac, estimated at something near $6 trillion in liabilities.  That's right, I said $6 trillion.  That is ONE HALF the current United States debt.

One wonders what the Senate Banking Committee must be doing all day.  I think, frankly, it's one big circle jerk.  I wouldn't trust any of those ratfuckers -- Democrat or Republican -- to balance the account statement of lemonade stand, much less make laws to regulate banking.

This is the price of cheap credit, my friends.  You protect what you value, and this country does not value affordable, manageable credit.  It values cheap credit, with few controls.  After all, these banks are large corporations, and their boards and senior managers are insulated from liability for being stupid and careless. 

Franklin Raines got off for his accounting scandal at Fannie Mae, and paid some paltry fines compared to the millions he walked away with.

The Bear Stearns folks -- walked.  Countrywide Mortgage executives -- hundreds of millions in bonuses.  The list goes on and on.  And the current leaders of Fannie Mae and Freddie Mac will walk, too.  They have run these companies into the ground with a sense of personal greed that would make Gordon Gecko blush.

And the government let them do it.

And now we will pay the price.

Wait... someone's knocking on my door.

"Hi, I'm here from the government, and I'm here to help!"