Marketplace Radio's introduction:
Now that Fannie Mae has just agreed to clean up its accounting and operations, it might be attractive for political leaders to put the mortgage financier's scandal behind them. But it may be tough to sweep it under the carpet, as commentator Robert Reich tells us in this edition of The Public's Business.Here is a Robert Reich column about Fannie Mae and Freddie Mac from November, 2003. It seems they have run up a debt of over 2 trillion dollars since 1995 and they have been caught making billion-dollar accounting mistakes.
Unlike most corporations, if Fannie or Freddie ever went belly up, American taxpayers would foot the bill. These two giants are just too big to fail. Since 1995, the two have tripled their combined debt to more than $2 trillion. At this rate, they'll soon exceed the debt of the entire federal government. And because financial markets assume that the federal government guarantees their debts, Fannie and Freddie can borrow money at a discount and use the cash pretty much as they want.And these government chartered companies have executives with multi-million dollar salaries and connections to both of the major political parties. Lovely mess.
You don't have to be a Wall Street wizard to know that when taxpayers bear the downside risks, and executives and shareholders get the upside gains, there may be a temptation to take undue risks with money. Remember the savings and loan debacle?
I'll post a link to Mr. Reich's current commentary when I find it on-line.
[Originally posted September 29, 2004.]
Update October 7, 2004 6:45 am
Fannie Mae has been in the news. Here is the link to Mr. Reich's Marketplace commentary: Getting tough with Fannie. Here is the link to the report mentioned in Mr. Reich's commentary: Office of Federal Housing Enterprise Oversight--Report of Findings to Date Special Examination of Fannie Mae (PDF) And here are some links to stories in the SCLM:- WP September 22, 2004
- NYT October 3, 2004
-
NYT October 6, 2004 and today's story, on yesterday's hearings: -
NYT October 7, 2004
Father, let me dedicate All this year to you
In whatever earthly state You will have me be
Not from sorrow, pain, or care Freedom dare I claim;
This alone shall be my prayer: Glorify Your name.
--from New Year's Hymn by Lawrence Tuttiett, 1864 (alt.)
In whatever earthly state You will have me be
Not from sorrow, pain, or care Freedom dare I claim;
This alone shall be my prayer: Glorify Your name.
--from New Year's Hymn by Lawrence Tuttiett, 1864 (alt.)
