True cost of Fannie/Freddie bailout more than twice Obama administration claim
... In a report delivered to the House Budget Committee on June 2, the CBO said a “fair value” accounting of guaranteeing the two defunct mortgage companies – known as Government Sponsored Enterprises (GSEs) – was more than twice as high as the Office of Management and Budget had accounted for.
“Specifically, CBO treats the mortgages guaranteed each year by the two GSEs as new guarantee obligations of the federal government,” the CBO report said. “For those guarantees, CBO’s projections of budget outlays equal the estimated federal subsidies inherent in the commitments at the time they are made.”
“In contrast, the Administration’s Office of Management and Budget continues to treat Fannie Mae and Freddie Mac as nongovernmental entities for budgetary purposes, and thus outside the budget,” the report stated. “It records as outlays the amount of the net cash payments provided by the Treasury to the GSEs.”
The total of those cash payments is $130 billion, and is normally reported as the cost of the bailout of the GSEs to date. However, the CBO said that merely counting the cash payments, and not the cost of federal subsidies granted to the GSEs, obscures their real costs.
Essentially, the CBO is accounting for the cost of the federal government guaranteeing the loans bought and securitized by the GSEs....
Fanniegate: Gamechanger For The GOP?
...If Morgenson and Rosner are right, there is someone the American people can blame for our current economic woes and it is exactly the cast of characters that a lot of Americans love to hate. Big government, affirmative action and influence peddling among Democratic insiders came within inches of smashing the US economy....
When Government Jumps the Shark
...But Fannie Mae represents a special problem for the Democratic Party and Democratic ideas. It is not just a vitally important institution led by prominent Democratic figures and part of a broader Democratic patronage network; Fannie Mae is one of the original New Deal institutions and the vision it was intended to serve stands at the heart of the concerns of the Democratic Party of the 20th century.
The fall of Fannie Mae is bigger than just another politicos run wild scandal. It stands as one of several signs that our current way of life is reaching its limits and that big changes are on the horizon. The Fanniegate debacle tells us that the progressive ideal is in the process of jumping the shark....
...At this point the program enters the third stage of life: it is now a Great White Elephant. It is a large and expensive program that does less and less good at a higher and higher cost. Fannie Mae stops helping creditworthy borrowers get affordable mortgages through simple and straightforward processes. Federal housing policy becomes increasingly complex as new layers and levels of subsidy and promotion are tacked on. As the incentives become increasingly misaligned, the country begins to over invest in housing; consumers start buying more house than they need because government support makes housing an attractive investment.
The Elephant process takes place in many ways. Health care programs become inflated with bells and whistles; programs originally intended to provide basic medical care gradually swell into huge and expensive monstrosities. Shouldn’t chiropractic care be covered? Psychiatric care? Acupuncture? And since government is paying for the care shouldn’t it regulate who provides the care through licensing procedures? Costs go up, procedures become more complex; efforts to control costs lead to more red tape....
