US uncaps Fannie/Freddie support, announces during Christmas holiday

posted at 1:00 pm on December 26, 2009 by Ed Morrissey

If an administration wanted to pull a fast one on American citizens and keep a move that puts them on the hook for hundreds of billion dollars as quiet as possible while still disclosing it, when would be the best time to take that action?  How about an evening when people all across the country turn off their televisions and laptops to spend time with family and friends, celebrating an important religious holiday?  Could any President be as calculating and cold-blooded as to do something like that?

Welcome to the new transparency:

The Obama administration’s decision to cover an unlimited amount of losses at the mortgage-finance giants Fannie Mae and Freddie Mac over the next three years stirred controversy over the holiday.

The Treasury announced Thursday it was removing the caps that limited the amount of available capital to the companies to $200 billion each.

Unlimited access to bailout funds through 2012 was “necessary for preserving the continued strength and stability of the mortgage market,” the Treasury said. Fannie and Freddie purchase or guarantee most U.S. home mortgages and have run up huge losses stemming from the worst wave of defaults since the 1930s.

“The timing of this executive order giving Fannie and Freddie a blank check is no coincidence,” said Rep. Spencer Bachus of Alabama, the ranking Republican on the House Financial Services Committee. He said the Christmas Eve announcement was designed “to prevent the general public from taking note.”

Treasury officials couldn’t be reached for comment Friday.

Why couldn’t they be reached?  Because it was Christmas. The announcement was designed to put them out of reach, just as it was designed to keep the news out of reach from the general public.  No one can seriously argue that Treasury and the White House woke up early on Christmas Eve and suddenly discovered a reason to lift the caps on the Fannie/Freddie bailout, after all.  This had to be in the works for weeks.  However, as the Wall Street Journal also reports, the White House had a deadline for acting unilaterally:

The Treasury removed the cap on the size of available bailout funds by amending agreements it reached with the companies in September 2008, when the government seized control of the agencies under a legal process called conservatorship. The agreement allowed the Treasury to make amendments through the end of the year, without the consent of Congress. Changes made after Dec. 31 would likely involve a struggle with lawmakers over the terms.

I’m wondering when Democrats will begin complaining about the “unitary executive” during Obama’s presidency (a concept they didn’t understand in the first place).

What reason would the White House need to lift the caps, anyway?  Of the $400 billion authorized by the previous bailout, Treasury has only used $111 billion of it, almost evenly split between Fannie Mae ($60 billion) and Freddie Mac ($51 billion).  The WSJ quotes an analyst from Credit Suisse as saying that the larger lending market would find the expansion of the Treasury commitment “reassuring,” but having almost $300 billion left in a line of credit should be pretty darned reassuring on its own.   And if a larger commitment was needed, the White House could have set a new limit rather than uncap it altogether.

It looks as though Obama wants to use Fannie and Freddie as proxies for more social engineering and wants to prepare for them to take more losses as a result.  That would be the only reason to completely uncap the commitment to cover its losses.  After all, the bailout was supposed to help put the two GSAs back into the black, and at the rate they have used that bailout (assuming no improvement), we wouldn’t have to worry about exceeding caps until 2012.  I’d bet that the Obama administration retools its foreclosure prevention programs to have Fannie and Freddie buy up the paper and forgive parts of the principal on the loans, and have taxpayers eat the losses on a massive basis.

Update: Business Insider’s Joe Weisenthal asked credit analyst Edward Pinto for his analysis, and he also thinks this sets up more massive government intervention and control of the lending markets.  Pinto lists five possibilities for action, and concludes:

The above actions would preserve and strengthen the government’s involvement and control over the country’s housing finance system and make it harder to reintroduce substantial private sector involvement later on.  They would also continue distortions in the marketplace leading to who knows what unintended consequences. Finally these steps would do nothing to deleverage the housing finance system, a key step in returning it to any degree of normality.

Be sure to read it all.  (via Twitter from Joe Weisenthal)


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Comments

The Repubs need to raise hell about this,AND have hearings on what led to last years”sudden”economic collapse

They are not going to, becuase both parties want the samemind of social engineering. The repubs just screw you slower is all.

paulsur on December 26, 2009 at 5:44 PM

Who is really behind this?

Obama’s not smart enough.

tru2tx on December 26, 2009 at 3:42 PM

Funny, I was wondering the same thing.

scalleywag on December 26, 2009 at 5:45 PM

Obama and his team, such as Acorn and SEIU, have underway. They do not intend to let the angry mob win next November’s elections.

GaltBlvnAtty on December 26, 2009 at 3:26 PM

+1000 Yes, you can bet your Christmas boots that several billion of the unaccounted for stimulus funds are now in the hands of Acorn and SEIU as they fine tune their voter fraud machine with unprecedented funding.

After seeing the methodical, deliberate, grinding, systematic and unyeilding way obama’s globalist overlords (I would love to get my hands on his Blackberry) have directed his administration to take over the banks, housing market, health care and automotive industries,(and all done in under one year!!) does anyone think for one second that they have not already, with their billions, made sure that
we will not have free and fair elections ever again, if they can help it? Does anyone think that they have not covered this vital point nine ways from Sunday? I don’t know how we can do it, but we have to have hundreds of thousands out watching the polls, and we have to be trained to know what to look for. But I am sure there are laws limiting how many can work the polls and don’t forget that Soros has started a campaign to elect leftist Secretaries of State to states that are vital in winning presidencies.

As Stalin was known to remark, “It doesn’t matter who votes, the only thing that matters is who counts the vote.”

tigerlily on December 26, 2009 at 5:45 PM

GaltBlvnAtty on December 26, 2009 at 3:26 PM
Our best hope beyond massive pre-election ground operations is election judges by the tens of thousands. A surplus of right leaning ballot watchers, precinct workers, election judges and overwhelm the system.

katy on December 26, 2009 at 3:31 PM

Are you aware that Soros is working to affect the election of the Secretaries of State in our assorted states? These are the people who make determinations about which votes are valid and worthy of being counted.

onlineanalyst on December 26, 2009 at 5:49 PM

Redistribute the wealth!
Reperations!
Coddle Terrorists!
Prosecute our Heros!
Impeach the Fascist!

dhunter on December 26, 2009 at 6:07 PM

ACORN has had a “Secretaries of State” project for several years.

The SoS of Ohio, whose decisions on voter registration verification was crucial in 2008, the SoS of Minnesota, whose decisions were critical in the senate recount, and the SoS of Oregon are all products of this ACORN campaign.

Wethal on December 26, 2009 at 6:10 PM

Who is really behind this?

SOROS, SOROS, FAWK-ING GEORGE SOROS. HUNGARIAN BY BIRTH, BENT UPON SOCIALIZING THE USA.

royzer on December 26, 2009 at 8:24 PM

Congress must reign in this administration before they lose any semblance of authority. The checks and balances that have kept our Republic on a relatively steady course for more than two centuries are in grave peril.

We don’t want no stinkin’ King Jug-ears.

hillbillyjim on December 26, 2009 at 9:36 PM

Fannie Mae just bought my loan from another lender. Why would they do that?

maryo on December 26, 2009 at 10:03 PM

Sometimes I wonder what it will take for citizens to put down their tools and laptops and take to the streets.
What will it take?

ouldbollix on December 26, 2009 at 10:35 PM

As long as Obama keeps that bitter chip on his shoulder, the country will continue to be attacked by domestic radicals.

mobydutch on December 26, 2009 at 10:48 PM

Sometimes I wonder what it will take for citizens to put down their tools and laptops and take to the streets.
What will it take?

ouldbollix on December 26, 2009 at 10:35 PM

A leader to rally us. I think many are ready and willing, as evidenced by the Tea Parties and 9/12 rally, but don’t know just what to do, how to do it, or when. I keep hoping that there is a group of modern day patriots plotting away somewhere and that they will let us know what to do, because I sure don’t. We need our own Paul Revere, ASAP.

But they better hurry, before this admin takes over the internet along with everything else, because online is a lot faster than a horse.

pannw on December 27, 2009 at 12:15 AM

If I were ever to cross paths with either Barney Frank or Chris Dodd, I would go to jail for murder.

mr1216 on December 27, 2009 at 12:20 AM

Sometimes I wonder what it will take for citizens to put down their tools and laptops and take to the streets.
What will it take?

ouldbollix on December 26, 2009 at 10:35 PM

A leader to rally us. I think many are ready and willing, as evidenced by the Tea Parties and 9/12 rally, but don’t know just what to do, how to do it, or when. I keep hoping that there is a group of modern day patriots plotting away somewhere and that they will let us know what to do, because I sure don’t. We need our own Paul Revere, ASAP.

But they better hurry, before this admin takes over the internet along with everything else, because online is a lot faster than a horse.

pannw on December 27, 2009 at 12:15 AM

I too have that hope that there is someone out there. They better hurry up though ,we are almost at a point of no return….

ouldbollix on December 27, 2009 at 7:00 AM

If this POS wasn’t black, we’d be trying to impeach him. He’s hiding behind his skin color.

LtE126 on December 27, 2009 at 7:47 AM

Want to buy a house? Want to get a loan? Your credit worthiness is not an issue, but Republicans, conservatives, and libertarians need not apply.

It’s The Joker‘s revenge.

petefrt on December 27, 2009 at 8:51 AM

As Stalin was known to remark, “It doesn’t matter who votes, the only thing that matters is who counts the vote.”

tigerlily on December 26, 2009 at 5:45 PM

So true, tigerlily. So true.

petefrt on December 27, 2009 at 8:53 AM

Crooks and Liars apparently understands the nature of the politicians … it just had the party wrong.

Jaibones on December 27, 2009 at 9:11 AM

Emmanuel will not allow Obamas justice dept to pursue this crooks. they are in a sense protecting each others backs. this BS like ACORN and so many other fraud setups all lead top the POTUS. And yes the corrupt MSM will turn its head.

Thats the Hope and Change you freeloaders been wantin a long time

mmmmm mmmmm mmmmm mmmmm mmmmm

bluegrass on December 27, 2009 at 11:23 AM

It’s getting late and my pitchfork and torch is getting restless.

What will it take? Seriously.

What?….

katy on December 26, 2009 at 1:04 PM

More and more I fear it is already too late.

Yakko77 on December 27, 2009 at 3:10 PM

This is power feeding money down a giant rat hole!!!

landlines on December 27, 2009 at 9:12 PM