Unlimited Liability for US at Fannie, Freddie

The Wall Street Journal editorial pages alerted us to yet another example of how executive branch, in cahoots with Democrat congressman are subverting any pretense at rule of law or limits on liability for Fannie Mae and Freddie Mac. The full article is worth a read, but here are some highlights.

On Christmas Eve, the Treasury lifted the $400 billion cap on potential losses as well as limits on what they can borrow. Dennis Kucinich is calling for an investigation. Dang, when Dennis Kucinich is the voice of reason, .... just can't finish that.

Think these companies are supposed to make money and be nursed back to health? Wrong, they have been directed to modify mortgages to prevent defaults, a sure money loser.

Fannie and Freddie will not be required to shrink the portfolio of mortgages they hold in their own account. This will allow them to re-inflate the housing bubble to aid elections in 2010.

Fannie and Freddie execs are exempt from pay caps at other banks in receipt of federal largess. Their HR director made $2.7 million.

Senator Chris Dodd that maven of banking rectitude (and number on Judicial Watch's list of 10 Most Corrupt Politicians, congrats) is of course omitting Fannie and Freddie from his "reform" goals for the banking industry. But now he has Republican cover from Senator Richard Shelby (R-ALgore level blindness to facts).

More zombie capitalism from the feds, emulating the Japanese.

Foxes and Henhouses

Over at BwD, Dean has a terrific post on how the foxes in the hen house (House Committee on Government Oversight and Reform) are holding hearings to purportedly prove that it was the rooster that ate all those chickens. Also, Franklin Raines, disgraced CEO of Fannie Mae, argues that it wasn't his fault either, the farmer should have stopped him.

Karl Marx, (not Groucho) said that history repeats itself, first as tragedy, then as farce. We seem to have evolved to an era where we get both at once.