A nice catch from our friends at Investors Business Daily today paints a portrait at the selectiveness of class-warrior outrage in the Obama administration. When AIG and other bailout recipients started to pay their remaining executives the bonuses for which they were contractually obligated, Barack Obama led a chorus of outrage against the private-sector firms:
Shortly after taking office, President Obama reacted to Wall Street bonuses handed out in January 2009 with incredibly harsh language, calling them “shameful” and “the height of irresponsibility.”
“Folks on Wall Street who are asking for help need to show some restraint and show some discipline and show some sense of responsibility,” he said. A few months later, Obama pledged that there would be “no more bonuses for companies that taxpayers are helping out,” calling them a violation of “our fundamental values.”
But by far the biggest recipient of bailout money are the two government-linked lenders Fannie Mae and Freddie Mac, which have paid millions in bonuses while the White House remains curiously silent:
Not only where they at the epicenter of the housing bubble, but also the government had to take them over, pumping in cash to cover their huge losses on the mortgages they owned and guaranteed. And far from paying taxpayers back, the best-case scenario for Fannie and Freddie is that their bailout will cost over $120 billion.
But that didn’t stop the two agencies from giving their top 10 executives $12.8 million in bonuses for meeting what have been charitably described as “modest goals.”
Why hasn’t the Obama administration erupted in similar shaking outrage over the bonuses at Fannie and Freddie? You have to read this to believe it:
When asked about it on Tuesday, press secretary Jay Carney washed the administration’s hands of the matter. “These entities are independent and therefore they are independent decisions,” he said. “The White House is not involved, and nor should it be.”
Independent? Are they kidding us? Had they been independent, we likely wouldn’t have had the housing bubble in the first place. These government-sponsored enterprises have never been independent, which is why they ended up with big bailouts that are, by the way, continuing to this day. AIG and other bailout recipients are paying the loans back, not demanding new funding.
Worse yet, Obama and the Democrats in Congress had the opportunity to make both Fannie and Freddie independent in their reform of financial-sector regulation, which became Dodd-Frank. Despite their central role in the housing bubble and financial sector collapse — their mortgage-backed securities were literally the link between the two — Democrats refused to privatize both entities when they had full control of Congress and the White House. Instead, they dumped tons of new regulation on Wall Street, where those MBSs got traded, rather than eliminate the government’s ability to manipulate the loan markets in the future in exactly the same way that led to the crisis in the first place.
Senator John Barasso has demanded that Obama take action to cancel the executive bonuses at Fannie and Freddie. I hope he’s not holding his breath.
Update: And right on the heels of this, guess who’s coming for more gruel?
Government-controlled mortgage giantFreddie Mac has requested $6 billion in additional aid after posting a wider loss in the third quarter.
Freddie Mac said Thursday that it lost $6 billion, or $1.86 per share, in the July-September quarter. That compares with a loss of $4.1 billion, or $1.25 a share, in the same quarter of 2010.
This quarter’s $6 billion request from taxpayers is the largest since April 2010.