Oblama Gonna Pay My Mortgage!

[leistb]

With deteriorating economic data showing unemployment is getting worse, the stimulus is failing and monetary policies are driving the towards a deflationary cycle; the poll numbers for The One and especially Democrats are in the toilet. They're getting nervous heading into the mid-term elections.

What has now become more of a persistent rumor as opposed to an annoying buzz, is the administration is considering paying your mortgage -or at least a part of it. Can the can-kicking get any more creative?

Read the latest iteration here. Read related items here and here.

By the way, why was Fannie and Freddie omitted from any of the provisions of the recently passed FinReg bill? Hmmm......

[rryan]

What I want to say is unprintable. I think I am going to be sick

[DReynolds]

Originally Posted by leistb

By the way, why was Fannie and Freddie omitted from any of the provisions of the recently passed FinReg bill?

The benign explanation is that they don't really exist anymore, since Fannie and Freddie were both seized by the Federal Govt in 2008. Under the present circumstances, the US owns and operates Fannie and Freddie which are no longer any different than any federal entitlement program, so it's not clear what would become of them.

Re-privatize? Not gonna happen. Wouldn't work anyway. Close them down? Not gonna happen (though it would be best in the long-run).

[DReynolds]

BTW, even my colleagues in the Econ department cannot explain the exact legal status of Fannie and Freddie. I find this very frightening, and maddening. It's a sad commentary on the Media and the populace that there is no demand for a clarification -- 2 years on.

The Treasury said they could "make payments to Fannie/Freddie" but that Fannie and Freddie were still "semi-independent". The shares are believed to be worthless, because the Govt will never return anything to shareholders. But bonds issued by Fannie and Freddie are said by the Federal Reserve to be "backed by the Treasury but not as safe as Govt bonds". What the hell does that mean?

http://www.npr.org/blogs/money/2010/..._platypus.html

[leistb]

Originally Posted by DReynolds

BTW, even my colleagues in the Econ department cannot explain the exact legal status of Fannie and Freddie. I find this very frightening, and maddening. It's a sad commentary on the Media and the populace that there is no demand for a clarification -- 2 years on.

Very maddening indeed and just one many sordid sub-plots in this whole cluster of government actions in recent years designed to overwhelm, further perpetuating the apathy.

The Treasury said they could "make payments to Fannie/Freddie" but that Fannie and Freddie were still "semi-independent". The shares are believed to be worthless, because the Govt will never return anything to shareholders. But bonds issued by Fannie and Freddie are said by the Federal Reserve to be "backed by the Treasury but not as safe as Govt bonds". What the hell does that mean?

http://www.npr.org/blogs/money/2010/..._platypus.html

Not disagreeing with your post but I don't seem to recall the Treasury having legal authority to make payments to anyone. Last I knew, spending initiatives originated in the House. Of course, this was not the case with TARP vis-a-vis, Paulson and Bush.

[flourbug]

http://www.calculatedriskblog.com/20...something.html

[DReynolds]

Originally Posted by leistb

Not disagreeing with your post but I don't seem to recall the Treasury having legal authority to make payments to anyone. Last I knew, spending initiatives originated in the House. Of course, this was not the case with TARP vis-a-vis, Paulson and Bush.

Right. There were about $300 billion in Federal payments to Fannie/Freddie in 2009, but they were not included in the Federal Budget. Nice, huh?

So it's an end-run around Congress. Is it legal? Doesn't look like it to me. But just like Social Security, Paulson/Geitner/Bush/Bernanke/Obama managed to make Fannie&Freddie into an off-the-books entitlement program.