Here's a news bit
Snow Warns Fannie, Freddie Pose Threat
Thu Apr 7,10:43 AM ET Business - Reuters
By Kristin Roberts WASHINGTON (Reuters) - Mortgage giants Fannie Mae and Freddie Mac could threaten the economy if Congress fails to curb their investment activities, U.S. Treasury Secretary John Snow said on Thursday.
In a second day of hearings before the U.S. Senate Banking Committee on the hot political issue of how to rein in government-sponsored enterprises, Snow told Congress to limit the size of the companies' mortgage portfolios, saying they are not needed to fulfill the core mission of supporting housing.
What's more, their size and the interest rate risk they carry potentially threatens the financial system and the economy.
"The risks undertaken by the GSEs, if not properly managed, may pose a threat to their solvency, the stability of the other financial institutions and the strength of our economy," Snow said in comments that often echoed Wednesday's testimony from Federal Reserve Chairman Alan Greenspan.
Snow said Congress should phase in limits on the companies' portfolio activities in order to protect the markets.
He also said the lines of credit the companies enjoy as part of their charter, and which he said markets falsely see as a sign that the government backs GSEs' debt, would only be used if a GSE were in "significant financial distress."
"Congress may wish to consider reforms in this area as well," Snow said in his prepared testimony.
The Bush administration has twice in recent years torpedoed legislation aimed at beefing up oversight of the extensive companies on the grounds that the measures lacked teeth...
for those who don't know, Freddie Mac & Fannie Mae are two govt-supported companies who handle home mortgages. they were started in the 40s, and helped lead to the post-war housing boom by making mortgages easier to acquire(and thus a larger middle class, more suburbs, etc). they've been in the news a bit lately due to certain accounting shenanigans pulled off in some of their departments. They control like a coupla trillion dollars worth of assets.
What's troubling to me is that i know there's something behind this, some greater goal serving longterm Republican interests, but I can't figure out exactly what. What do they stand to gain by having these two groups limit that certain activity?
thing is, this seems such a low-profile newsstory that I don't think that it'll get the scrutiny/analysis that it deserves. I know something's up, but I don't know enough to connect the dots.
I'd ascribe these feelings to slight paranoia, except that the last 5 years have shown that _every_ single thing the current Admin has made noise about has been in the purpose of serving short- and long-term Repub/conservative/partisan interests. What benefits they'd ultimately gain from this just aren't as immediately clear, other than just the overall stifling of any goverment program that doesn't immediately serve their mindsets.
I hope Paul Krugman writes something on this.
― kingfish, Thursday, 7 April 2005 18:25 (twenty years ago)
three years pass...