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US Promises Unlimited Financial Assistance to Fannie Mae, Freddie Mac
The Obama administration pledged Thursday to provide unlimited financial assistance to mortgage giants Fannie Mae and Freddie Mac, an eleventh-hour move that allows the government to exceed the current $400 billion cap on emergency aid without seeking permission from a bailout-weary Congress.
The Christmas Eve announcement by the Treasury Department means that it can continue to run the companies, which were seized last year, as arms of the government for the rest of President Obama's current term.
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.
The administration faced a congressionally mandated deadline of Dec. 31 to increase the amount of aid it could provide to Fannie Mae and Freddie Mac, which together have already received $111 billion in assistance.
Treasury said Thursday that its decision did not mean the firms would need $200 billion or more apiece, but that it instead was seeking to assure markets that the government would stand behind the companies. In a statement, Treasury said the move "should leave no uncertainty about the Treasury's commitment to support these firms as they continue to play a vital role in the housing market during this current crisis."
By promising to keep the companies solvent, the government can maintain its sweeping power over the housing market. Fannie Mae and Freddie Mac have played a central role in Obama administration policies to keep mortgage interest rates low, restructure unaffordable mortgages, stop foreclosures and funnel money to housing programs around the country.
The Bush administration took over the firms in September 2008 as the financial crisis entered its most severe phase and promised $200 billion to keep the companies solvent. The Obama administration later doubled that figure.
While the ultimate cost of the bailouts is unknown, the administration estimated earlier this year it would cost $171 billion, and some officials said they expect it could rise further. Analysts have said it could be much higher. The cost will depend in part on how aggressively the administration continues to use the firms to stimulate the housing market because these steps could curtail profitability.
Under the terms of the latest decision, the administration's open-ended commitment will expire in 2012. Then, the firms will only be allowed to receive the balance of the $400 billion remaining today -- about $290 billion.
The administration is set to release broad principles in February for reforming the companies. Many experts predict that the government will have no choice but to hold on indefinitely to many of the companies' most troubled assets -- mortgage investments made during the housing bubble to less-than-worthy borrowers.
But an administration official said it could take several years to resolve the future of the companies, especially if Congress isn't keen to take up the politically charged issue during the 2010 midterm election year, and if the government wants to preserve the ability to influence the housing market. The companies together own or insure the majority of home loans, and no viable private system exists that could replace them.
Even as the administration has broadened its commitment to Fannie Mae and Freddie Mac, it said it would wind down mortgage-assistance programs, including one that bought Fannie Mae and Freddie Mac's mortgage investments.
Fannie Mae and Freddie Mac have long been targets for Republicans, who say they are evidence of how government support for the housing market contributed to the financial crisis.
"The Obama administration's decision to write a blank check with taxpayer dollars for the continued bailout of Fannie Mae and Freddie Mac is appalling," said Rep. Scott Garrett (R-N.J.), a member of the House Financial Services subcommittee that oversees Fannie Mae and Freddie Mac. "Not only is this a continued bailout of failed entities that need to be privatized to protect the taxpayer, the timing of the announcement is clearly designed to try and sneak the bailout by the taxpayers."
On Thursday, federal officials defended the administration's new bailout authority and the compensation packages. They said the pay was necessary to retain talented executives who can oversee the companies' vast mortgage holdings.
Fannie Mae chief executive Michael J. Williams and Freddie Mac chief executive Charles E. Haldeman each will receive a $900,000 base salary. The rest of their compensation will be in incentive payments and bonuses dependent on whether they stay with the companies and achieve business targets. The compensation of other top executives will follow a similar formula.
While the pay is significantly more than what Fannie and Freddie executives received a year ago, the packages are less than what top company officials got before the government takeover. Only five executives at each firm will be eligible to receive more than $500,000 in salary.
"The management of these companies involves responsibility for $2 to $3 trillion of mortgage assets," said Edward DeMarco, acting director of the Federal Housing Finance Agency, the chief regulator of Fannie Mae and Freddie Mac. "It is critical to the taxpayers' financial interests that these assets be carefully managed in a difficult environment to minimize taxpayer losses."
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47 Comments so far
Show AllHow much is "unlimited"? ...........
Oh Gee, Thanks Santa.
Maybe you can help Medicare next...
Helping Medicare is not likely to ever be on the Democrats' corporate paymasters' radar so it ain't gonna happen.
When Teddy Roosevelt formed the Bull Moose Party a century ago he vowed "to destroy the invisible government, to dissolve the unholy alliance between business and corrupt politicians".
The US electorate, ungrateful for Teddy's earlier trustbusting, elected Woodrow Wilson, the guy who predicted WWI would be a war to end all wars. Now that it is clear that Obama is no FDR, JFK, RFK, or MLK some of his apologists are comparing him to Wilson. He is actually a cross between Hoover and Wilson.
Resurrect the Bull Moose Party or kiss the future of the US goodbye.
"Resurrect the Bull Moose Party or kiss the future of the US goodbye"
It may be coming......
Fannie Mae and Freddie Mac have played a central role in Obama administration policies to keep mortgage interest rates low, restructure unaffordable mortgages, stop foreclosures and funnel money to housing programs around the country.
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Seems like they completely and utterly failed on three of those four aims.
A federal mandatory foreclosure law for the USA could go long toward solving much of the problem with bank foreclosures on homes, as it has already had some solid effect in states which such laws including Ohio, With such legislation, bundled mortgage which so many big banks have on houses to increase their investment returns tend not to to have any clear cut title to any specific mortgage and thus with judges in such case demanding clear title to such specific property could put a major crimp on such foreclosures,
This US president's talk sounds good, but his actions have favored the super rich, pampered power elites, as that's where he's getting bankrolled, The people must continue through social movements and otherwise to make the case that his failure to act to solve problems of foreclosures on people's homes will boomerang on him politically no matter how much special interest power elite money he gets from these pimps,
The message to him has to be stern that we're keeping account of what he does not just what he says,
AD
AD
I believe the message to him in the New Year will be that he has failed the American citizens in every way.
They are pimps indeed and some of them are in the White House providing advice.
"$42 million in Wall Street-style compensation packages to 12 top executives for 2009"
This kind of thinking just boggles the mind.
"It is critical to the taxpayers' financial interests that these assets be carefully managed in a difficult environment to minimize taxpayer losses."
They did such a good job of managing that FM and FMc are in recievership. A good accounting firm could do a better job. This is disgraceful.
Mixing profit with non-profit, this is like mixing good with evil and it creates the absolute worse kind of evil.
DARKNESS: an illusion of good hiding misery, a pretense of good hiding an intent to be enriched upon your misery, a mixture of good and evil such that no one can tell good from evil.
"a mixture of good and evil such that no one can tell good from evil."
Perhaps that would make false 'goodness,' which is part of the darkness as well.
Indeed.
Merry Christmas from the Obama Administration.
Mr. Obama's present to the American people is continued debt slavery.
How ironical that a half black African man would be the one keeping Americans in slavery to the financial oligarchy.
On this holy day, remember the lessons of Christ and E. Scrooge. It is not what you have done that matters, but who you are.
It appears that Mr. Obama has done many remarkable things, but he is an empty suit. He has no ethics, morals, and no soul.
Well, actually Obama is identical to the vast majority.
As he has an illusion that he deserves more, which gives
him a guilty conscience if ever he fails to take all he
can take.
What capitalism is all about, the unregulated freedom for
those born with a gifted ability to achieve to self-actualize,
to be all they can be, to take all that the law will allow.
For what a man feels he deserves, this is his conscience,
his highest priority to fulfill, and it controls every
aspect of his mind, character and personality.
NEW ---- U.S. CONSTITUTION
(1) EQUALITY
All men are not created equal, but born with a different ability to achieve
as a test. To see if men pass what their excess wealth down to those less
gifted where it belongs.
(2) DICTATORSHIP OUTLAWED
To prevent a dictatorship ruled by those born with a gifted ability to achieve,
highest priority of government shall be to make it a crime for the highest
achievers to have more land, more wealth or more control over elections
then those less fortunate.
(3) Your turn?
Constitutional Convention here we come!
I would not mind a bit if they pay them millions of dollars in bonuses, so long as 65% of every penny over one million is taken in income taxes. If they can't survive on that amount then they should be taken out and shot.
PROFIT ---- NEVER MIX WITH NON-PROFIT
If the goal of Fannie and Freddie is to maximize profits, to be keen, sharp and on top of all the latest tactics used by Wall Street experts, to participative in the manipulation and control of future trends in high finance, then for an absolute a hundred times more then his pay can an executive increase capital growth and corporate gain.
But if non-profit and for the best good of society is their only goal, then slow thinkers are the best as morality requires a reverse way of thinking.
For any stupid genius with blinders on can bankrupt competitors and run roughshod over the market.
But to be fair to borrowers and at the same time not burden tax payers, this requires the wisdom of slow and careful regulators following simple and honest regulations.
For either a corporation must be all-profit or non-profit, otherwise we have darkness, a pretense of good hiding misery. For executives will keep all the profits while tax payers absorb all debt.
The United Kingdom introduced a 50 percent tax on Bonuses paid out to Bank Execs. Barclays has announced 150 percent pay raises to these same execs so the execs come out way ahead even with the tax.
Since the Bonus tax is levied against the Banks profits and the increased taxes paid by persons because of the raise are paid by the individual , Barclays comes out ahead.
Watch for other Financial institutions to use the same sort of tactics.
Who ARE these people! From a Public agency at it's creation in the 60's - to being Privatized under the deregulation frenzy of the 80's.
Who ARE these thieves ?
Where do they live?
Where is the Money hidden?
Why are they still free to walk the streets?
WTF!!!
Jeez, using a quote from Scott Garrett like he's a man of the people is laughable. This wingnut is my Congressman, and he's nothing but an opportunistic corporate shill.
He consistenly votes against women, children, animals, seniors, vets, the environment, and labor. Garrett voted against S-Chip, twice.
He's 100% pro war, pro business, pro Wall St.; a free market fanatic bent on privatizing everything. He doesn't give a shit about the middle class or the poor.
It pisses me off that he appears to be so concerned about taxpayers. I'm certain this creep wouldn't approve a plan to help starving kids in his own district. Like all Republicans, his solution for everything is corporate tax breaks.
This is an example of how right wing opportunists will occupy the populist space vacated by Obama's policies. Watch for more.
Joe
Goldfarb is stroking Garrett.
The Obama administration has no heart.
"The Obama administration's decision to write a blank check with taxpayer dollars for the continued bailout of Fannie Mae and Freddie Mac is appalling," said Rep. Scott Garrett (R-N.J.), a member of the House Financial Services subcommittee that oversees Fannie Mae and Freddie Mac. "Not only is this a continued bailout of failed entities that need to be privatized to protect the taxpayer, the timing of the announcement is clearly designed to try and sneak the bailout by the taxpayers."
Nice job of compartmentalization there, Garrett. This drives me nuts. I agree that the administration decision to write a blank check with taxpayer dollars for the continued bailout of Fannie Mae and Freddie Mac is appalling. But, what I find more appalling is the fact that administration after administration after administration continue to write blank checks totalling trillions and trillions of dollars over the years supporting an illegal, interventionist, militarist foreign policy that does nothing but bring death and destruction to millions of innocents worldwide in pursuit of other nations' natural resources. I find it appalling that there is always always always enough money for death and destruction, but nothing for the citizens of this country. Rage against a few billion for health care but promote trillions for war. Rage against the costs of social security but promote trillions for more death and destruction. We 300 million are ruled by a few hundred oligarchs. The oligarchs must be dealt with most severely.
Kent,
You might be interested in reading this article about an "estimated" $3.3 Trillion missing from the Treasury: http://www.rense.com/general70/trill.htm --- This is an outrage!
I will definitely read the article. But for now I want to add a comment to yours. On September 10, 2001, it was announced that the Pentagon could not account for $2.3 Trillion dollars (yes TRILLION). On September 11, 2001, that story died. Now, onward to that rense.com article.
until the meltdown.. fm & fm were the final backstop for mortgage backed securites...
i'd have to go back to some matt tabbai articles for the extent of their role in the housing bubble ponzi scheme... since their underwriting standards control what mortgage loans can be made... by virtue of that their standards determine what investors would buy on the secondary market...
so the subprime loans... wrapped up in mortgage backed securities... had the implicit backing of fm & fm... so imvestors essentially bought... the "full faith and credit" of the u.s. treasury...
remember when they "relieved" the guy in charge...? it was "real quiet" and it went off the news cycle real quick...
if these two were to tank... it would make the fallout from lehman look like a good day at the office...
there's more than one hole in the dike of financial potemkin-ism going on since the crash of '08... and the pressures on the other side haven't subsided one bit either...
Who ARE these feaking AssHoles! Where do they live? I am Mad and I ain't gonna take it anymore !
Not one word in the article about how this move will actually "trickle down" to help those underwater or in foreclosure on their largest lifetime investment. All about high-finance and internecine Washington.
Meanwhile people are only beginning to realize how nasty the situation is becoming. For example, how about couples who spent most of their adult lives trying to plan to send their kids to college (while college costs increase at close to the rate of health insurance costs...). Oops! No money. How about retirement? Oops, that 401(k) kaput (just watch the market drop next spring...again). You say you have a pension coming? Checked its status lately?
And those are the problems facing the relatively affluent.
Those frugals who learned from experiencing the Great Depression somehow didn't pass on the lessons learned, overwhelmed by the countercultural forces of mass advertising and its appeal to the lowest common denominator of consumerism, the "I'm worth it!" "Go out and shop" mentality.
Face it citizen, you're a worthless piece of crap! Now build from there.
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Welcome to the Untied States of Amnesia!
Rahm Emanuel MADE SURE THIS BARGAIN HAPPENED....
Rahm Emanuel is an unconvicted criminal. Patrick Fitzgerald and the FBI went after the wrong Chicaogan as well. The real criminal from Chicago is Rahm Emanuel and the Daley clan not Rod Blagojevich...
What the U.S. Congress does day in and day out are bribes, extortion and blackmail. The ex-Governor did child's play compared to what the Obama-Biden-Emanuel-Clinton White House just keeps on keeping on doing compared to the miniscule nonsense they claim Rod Blagojevich did.....
Free Rod Blagojevich & Indict Rahm Emanuel and other criminals in the Obama White House!!!!
FDL ACTION CENTRAL – Sign our (FDL/Jane Hamsher) Petition to Attorney General Eric Holder:
We write to demand an immediate investigation into the activities of Rahm Emanuel from his time at Freddie Mac, and the potential coverup of criminal activity. Join us in calling for the Department of Justice to investigate White House Chief of Staff Rahm Emanuel’s dealings at Freddie Mac and the subsequent stonewalling of an investigation.
» Sign the petition: Rahm should be investigated and resign. – INVESTIGATE RAHM - http://action.firedoglake.com/page/s/investigaterahm
Jeevee
These three have the possibility of saving this country and the world if elected president: Ralph Nader, Dennis Kucinich, Russ Feingold. Anyone else politically and sensitively honest?
Cynthia McKinney.
If the original $400 billion had been distributed directly to homeowners facing foreclosure, it would have done a lot of good. Instead we continue to send $$ to enable failed agencies to continue in their clueless and self-indulgent ways.
For instance, $400 billion could have bailed out 8 million troubled home-owners to the tune of $50,000 each. Or 16 million could have gotten $25,000 to tide them over with arrears. With a little help, how many families would have been able to enjoy this holiday season in their own homes?
There must be requirements that this money go directly to people losing their homes and not to banks and agencies that caused these problems to begin with. One year has passed since we got rid of George Bush. In that time, how many families have been foreclosed and evicted?
Who is minding the store?
Joe
RE:"The Obama administration pledged Thursday to provide unlimited financial assistance to mortgage giants Fannie Mae and Freddie Mac..." - Goldfarb article
ME: Sign the Petition – Investigate Rahm Emanuel
FDL ACTION CENTRAL – Sign our (FDL/Jane Hamsher) Petition to Attorney General Eric Holder:
We write to demand an immediate investigation into the activities of Rahm Emanuel from his time at Freddie Mac, and the potential coverup of criminal activity. Join us in calling for the Department of Justice to investigate White House Chief of Staff Rahm Emanuel’s dealings at Freddie Mac and the subsequent stonewalling of an investigation.
» Sign the petition: Rahm should be investigated and resign. – http://action.firedoglake.com/page/s/investigaterahm
"Change You Can Believe In," a CONVENIENT UNTRUTH !
Figures. People don't even know these are private companies.
When the government does the right thing and helps it's citizens it inevitably will help out business. When the government helps business, well it's pretty much tax money down the drain!
Anybody remember that old Billy Joel song that said:
"When the Mafia, took over Mexico...."
I really suspect the Mafia must have merged with the US government. Exortion, murder, torture, rape and theft of the Us treasury and the whole planet is the order of the day.
And anytime anybody starts to tell the truth about what's going on, they develop nasty aircraft trouble like Paul Wellstone or DNC chairman Ron Miller, or they get a nice little anthrax letter in the mail like senator Tom Dachel
Or their wife is outed as a CIA spy as revenge for blowing the lid off the "BeneDick Cheney" Niger Yellowcake scam....
Federal Politicians = Mobsters
Just my opinion....
TJ
"All tyranny needs to gain a foothold is for people of good conscience to remain silent." - Thomas Jefferson
Read Robert Ludlum's book entitled Trevayne. He wrote about this almost 40 years ago. This book was originally published under the name of Jonathan Ryder; book publishing policy was to only publish one book a year by an author's name!?!
Interesting if not seemingly related to the "Shills" [meaning some Congress people and possibly the Presidency], that these "Shills" are not on this list. Everyone
in the United States needs some sort of health care, private, public, combination or whatever just for being alive. You have killed people who could of remained alive with health care!
http://www.fbi.gov/wanted/topten/fugitives/fugitives.htm
Notice that five are of Spanish origin!
The Federal Bureau of Investigation's Ten Most Wanted Fugitives
This action by the Obama administration has a faint whiff of 1928/1929 when repeated interventions by the Fed (and private bankers) could not save Wall Street. I have a hunch that we are on the cusp of another eco-financial disaster.
Faint whiff of 1929 ? Nope that was ' mishandled ' Bernacki & Obama - are dealing with it much differently this time around. Whatever folks think of Obama - he did NOT create this global collapse . Horrid leadership- from Reagan 1980- Bush 2008 global meltdown did. Reagan Bush Rubin Greenspan & pals toxic policies that legalized fraud & unethical practices- in lending - and derivatives - credit default swaps- etc on Wall St
+ Reagan and Bush's trillions to fat cat cuts- 2 LONG wars- one lied into- another badly mismanaged
for 7 long yrs. - undermining working folks- our wages down or flat last decade.
Obama took all that on History- will show his much hated stimulous pkg- prevented a LONG DEEP Depression
Corrupt organizations need to help out other corrupt organizations. It's good to have allies.
Never mind that millions of funds are unaccounted for. We'll keep the money flowing brother!
I can understand the government's undying loyalty to banksters and its pledge to provide a never-ending supply of loot but why? Who the hell is going to get a mortgage with them when the wage slaves no longer have jobs? So, I guess the idea then is to continue pumping up the CEOs, to ensure that their cash cow never dries up.
Crowsnest writes:
"I have a hunch that we are on the cusp of another eco-financial disaster."
Yup.
dianrib writes:
"Whatever folks think of Obama - he did NOT create this global collapse ."
True, but he is part and parcel of the continuum intent on falsely propping up the "market" in hopes of a "recovery" that can never happen. As Dean Baker has observed, often, the collapse of the housing bubble cost Americans many trillions in false equity and thus false purchasing power. The economy is allegedly based around two-thirds on consumerism, but today people can not afford that level of consumption.
There is a reason they call these things bubbles. What is holding up the banking system right now is a change in accounting standards to make their books look better, while millions of mortgage holders remain "underwater" and foreclosures continue essentially unabated with little help from either the bailouts or the Stimulus package much of which involved tax breaks that do nothing to "stimulate" because there is no demand.
Meanwhile, despite this lack of purchasing power, inflation is creeping up because the Fed is printing money like there is no tomorrow. Watch the price of basic commodities, like a can of beans. Doubled in the past year. Or bananas; way up. A can of Campbell's soup? Outrageous.
Pay attention folks. One cipher worth considering is the cost of generic protein. Another is the cost of quality cooking oil. A loaf of "real" bread?
Meanwhile, be sure to become alarmed by silly young Nigerian kids passing through secured airports carrying explosives in their underwear! One planted "bomber" on a plane gets three days and more of wall-to-wall "news" coverage while the MSM offers no details on a trillion-dollar health care "reform" package...
Ask yourself, What's Important? KY Jelly?
Poof.
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