# Gov't conservatorship of Freddie Mac & Fannie Mae! **URL:** \ **Category:** Great Debates\ **Created:** [September 6, 2008, 2:44am UTC](https://boards.straightdope.com/t/govt-conservatorship-of-freddie-mac-fannie-mae/462279 "2008-09-06T02:44:41Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![SmartAleq](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/smartaleq/32/163_2.png) [@SmartAleq](https://boards.straightdope.com/u/SmartAleq)\ **Post date:** [September 6, 2008, 2:44am UTC](https://boards.straightdope.com/t/govt-conservatorship-of-freddie-mac-fannie-mae/462279/1 "2008-09-06T02:44:41Z")
[From the New York Times.](http://www.nytimes.com/2008/09/06/business/06fannie.html?_r=2&hp&oref=slogin&oref=login) Well, ladies and gentlemen, the shit is well and truly hitting the fan now. > [@](#): > > The plan, which would place the companies into a conservatorship, was outlined in separate meetings with the chief executives at the office of the companies’ new regulator. The executives were told that, under the plan, they and their boards would be replaced and shareholders would be virtually wiped out, but that the companies would be able to continue functioning with the government generally standing behind their debt, people briefed on the discussions said. > > It is not possible to calculate the cost of any government bailout, but the huge potential liabilities of the companies could cost taxpayers tens of billions of dollars and make any rescue among the largest in the nation’s history. I’ll grant you both Freddie and Fannie were in pretty bad shape, but between the two of them they either hold or back half the $12 trillion in mortgage debt outstanding in the US. If I’m reading this rightly, any mutual fund or pension fund that has stock in either one is now cataclysmically screwed, and anybody who needs a home loan or a refinance in the foreseeable future had pretty much better just kiss the concept goodbye. Well, the floor is open–just how screwed are we? ---
**Author:** ![Cervaise](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cervaise/32/16693_2.png) [@Cervaise](https://boards.straightdope.com/u/Cervaise)\ **Post date:** [September 6, 2008, 2:48am UTC](https://boards.straightdope.com/t/govt-conservatorship-of-freddie-mac-fannie-mae/462279/2 "2008-09-06T02:48:49Z")
“Here’s our plan. We will promise to bail them out if it comes to that. Our guarantee of support will reassure everyone that the failure won’t happen, and it’ll stimulate investment, and we won’t need to bail them out.” “Wait, say what?” “By promising to rescue them, we won’t need to rescue them.” “Huh?” “Trust us on this.” “Yeah, let us know how that works out.” Fucking geniuses. ---
**Author:** ![SmartAleq](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/smartaleq/32/163_2.png) [@SmartAleq](https://boards.straightdope.com/u/SmartAleq)\ **Post date:** [September 6, 2008, 2:54am UTC](https://boards.straightdope.com/t/govt-conservatorship-of-freddie-mac-fannie-mae/462279/3 "2008-09-06T02:54:25Z")
No shitsky–nice to know that Mr Syron, chief exec of Freddie Mac, made sure he got his while the whole fucking thing was tanking–from page two of the linked article: > [@](#): > > But privately, senior officials have been critical of top executives at the companies, particularly Freddie Mac. They have raised concerns about major risks to taxpayers of a bailout of companies whose executives have received huge compensation packages. Mr. Syron, for instance, collected more than $38 million in compensation since he joined the company in 2003. The things you see when you don’t got a gun… And the McCain campaign is saying this election “isn’t about the issues.” Oooo-KAY then! ---
**Author:** ![Hyperelastic](https://avatars.discourse-cdn.com/v4/letter/h/a3d4f5/32.png) [@Hyperelastic](https://boards.straightdope.com/u/Hyperelastic)\ **Post date:** [September 6, 2008, 3:43am UTC](https://boards.straightdope.com/t/govt-conservatorship-of-freddie-mac-fannie-mae/462279/4 "2008-09-06T03:43:24Z")
The US government is using taxpayer dollars to take an ownership stake in two corporate turds that, had they been held to the same rules as any other mortgage company, would have been bankrupt years ago. That means you and I and every other taxpayer are now neck deep in trillions of dollars worth of mortgages that are about to go bad. Everyone who was paying attention saw this coming, but their silence was bought by massive lobbying on the part of the FMs. What’s the government going to do with all those houses it’s shortly going to be buying back for 50 cents on the dollar? ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [September 6, 2008, 4:02am UTC](https://boards.straightdope.com/t/govt-conservatorship-of-freddie-mac-fannie-mae/462279/5 "2008-09-06T04:02:13Z")
> [@Cervaise](#): > > “Here’s our plan. We will promise to bail them out if it comes to that. Our guarantee of support will reassure everyone that the failure won’t happen, and it’ll stimulate investment, and we won’t need to bail them out.” > > “Wait, say what?” > > “By promising to rescue them, we won’t need to rescue them.” > > “Huh?” > > “Trust us on this.” > > “Yeah, let us know how that works out.” > > Fucking geniuses. The scary thing, is that that’s about right. Even scarier is that that may be the best plan we’ve heard. If you have a better one, I’d love to hear it. ---
**Author:** ![Mr.Moto](https://avatars.discourse-cdn.com/v4/letter/m/9de0a6/32.png) [@Mr.Moto](https://boards.straightdope.com/u/Mr.Moto)\ **Post date:** [September 6, 2008, 4:04am UTC](https://boards.straightdope.com/t/govt-conservatorship-of-freddie-mac-fannie-mae/462279/6 "2008-09-06T04:04:11Z")
> [@SmartAleq](#): > > And the McCain campaign is saying this election “isn’t about the issues.” > > Oooo-KAY then! Uh huh. Let’s look at some recent Freddie Mac and Fannie Mae board members who really should have caught this shit: Fannie Mae James A. Johnson, former chairman and CEO: Aide to Vice President Walter Mondale; recently led Sen. Barack Obama’s vice-presidential search team Jamie Gorelick, former vice chairwoman: Deputy attorney general under President Bill Clinton; former Defense Department general counsel; member of 9/11 Commission Franklin D. Raines, former chairman and CEO: Budget director under Clinton Thomas E. Donilon, former executive vice president: Former assistant secretary of state under Clinton; senior adviser to Michael Dukakis’ presidential campaign; national campaign coordinator for Walter Mondale’s presidential campaign; congressional liaison for President Jimmy Carter. Robert B. Zoellick, former executive vice president: Former deputy secretary of state and U.S. Trade Representative under President George W. Bush; currently president of the World Bank Louis J. Freeh, board member: Director of the FBI under Clinton; federal judge Stephen Friedman, former board member: Assistant to Bush for economic policy Michele Davis, former senior vice president: Deputy assistant to Bush; currently assistant secretary of the Treasury. Wayne Berman, outside lobbyist: Assistant Secretary of Commerce under President George H.W. Bush; senior adviser in Bush-Cheney presidential transition; currently a fundraiser for Sen. John McCain’s presidential campaign. Steve Ricchetti, outside lobbyist: Deputy chief-of-staff to Clinton Kirsten Chadwick, outside lobbyist: Special assistant to President George W. Bush for legislative affairs; currently a fundraiser for McCain’s campaign. Freddie Mac Richard F. Syron, chairman and CEO: Deputy assistant secretary of the Treasury Ralph F. Boyd Jr., executive vice president: Assistant attorney general for civil rights Dennis DeConcini, former board member: U.S. senator from Arizona Robert R. Glauber, board member: Undersecretary of the Treasury under President George H.W. Bush David J. Gribbin III, former board member: Aide to Vice President Dick Cheney; assistant secretary of defense under President George H.W. Bush Harold Ickes, former board member: Adviser to President Clinton and Sen. Hillary Clinton; member of the Democratic National Committee. Rep. Rahm Emanuel, former board member: Senior adviser to President Clinton; former chairman of the Democratic Congressional Campaign Committee and chairman of the House Democratic Caucus. Susan Hirschmann, outside lobbyist: Chief-of-staff to former House Majority Whip Tom DeLay of Texas Michael J. Bates, outside lobbyist: Campaign official for President Reagan, presidential candidate Bob Dole, President Bush. Martin Paone, outside lobbyist: Secretary of the Senate J. Patrick Cave, outside lobbyist: Acting Assistant Secretary and Deputy Assistant Secretary of the Treasury Susan Molinari, outside lobbyist: U.S. Congresswoman from New York [From here.](http://www.npr.org/templates/story/story.php?storyId=92540620#92534513) Now, how is just an election supposed to magically clean this up - just switching from Clinton to Bush did nothing. And let’s remember that Clinton appointees stayed on after the Clinton term - Gorelick was vice-chairman of Fannie Mae from 1997 to 2003. ---
**Author:** ![SmartAleq](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/smartaleq/32/163_2.png) [@SmartAleq](https://boards.straightdope.com/u/SmartAleq)\ **Post date:** [September 6, 2008, 5:02am UTC](https://boards.straightdope.com/t/govt-conservatorship-of-freddie-mac-fannie-mae/462279/7 "2008-09-06T05:02:18Z")
I was just shaking my head over the idea that “personalities” could possibly be more important than the very real, very terrifying, and very imminent problems this country is facing. I’ve long had the view that it’s not a D vs R problem in this country, it’s a rich vs not rich problem. Rich, arrogant, entitled assholes are legion and they’re running the country in all the important ways–presidents come and go but the old-boy network stays in place. Old boys who look the other way whenever another old boy wants to gut a pension fund or cripple a program to help people who aren’t rich in order to make themselves a little more rich. It has to stop somewhere–we literally cannot survive any more of this. Unemployment is at a five year high, mortgages are tanking, the price of everything is skyrocketing, what’s next–breadlines? Hoovervilles? It’s just not working to keep letting the rich fucks give themselves more and more at the expense of everyone else–I wish I had the answers but I don’t. The best I can do is to vote against yet another old rich fuck who seems even more clueless and solutionless than I am. I sure hope it’s enough. This is going to be ugly and scary… ---
**Author:** ![Kilvert\_s\_Pagan](https://avatars.discourse-cdn.com/v4/letter/k/c37758/32.png) [@Kilvert\_s\_Pagan](https://boards.straightdope.com/u/Kilvert_s_Pagan)\ **Post date:** [September 7, 2008, 6:08pm UTC](https://boards.straightdope.com/t/govt-conservatorship-of-freddie-mac-fannie-mae/462279/8 "2008-09-07T18:08:48Z")
Call me nuts, but I’m glad to see this. Heck, even _The Economist_ has been calling for nationalizing the FMs. Our government was, for all practical purposes, on the hook for the losses anyway. What this move does is removes the absurd situation in which, if the FM’s make money, they get to keep it, but if they lose money the government covers it. That’s not reasonable (nor is it even capitalism), and it helped lead to the recklessness that got both entities into this mess. ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [September 7, 2008, 6:39pm UTC](https://boards.straightdope.com/t/govt-conservatorship-of-freddie-mac-fannie-mae/462279/9 "2008-09-07T18:39:40Z")
One of the really cool things about being a radical lefty and screaming about the greed and stupidity of the running dog jackals of the ruling class is that you just have to wait a while and they will prove you right. Downside is, they prove you right again and again and again… But lets have a moments care here, for the real victims, those poor bereft CEOs and such. Now they will slink away in disgrace, with only a meagre few tens of millions of dollars to comfort them. They’ll be cut dead in the Hamptons, you know, their hot tub parties in Aspen unattended, They will be forced to a life of ignominy and shunning, with nought but hookers and blow to comfort them. Alas! What is moving your family into an SUV compared to such \*real \*suffering? _Oh, tempura! Oh, morays!_ ---
**Author:** ![SmartAleq](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/smartaleq/32/163_2.png) [@SmartAleq](https://boards.straightdope.com/u/SmartAleq)\ **Post date:** [September 7, 2008, 7:01pm UTC](https://boards.straightdope.com/t/govt-conservatorship-of-freddie-mac-fannie-mae/462279/10 "2008-09-07T19:01:24Z")
I knew it was almost inevitable that this was going to happen–but if it had happened earlier it might have been a bit less expensive overall. The economy can’t support the FM’s tanking completely, that would just take the whole shebang down entirely. I’m just thinking about all the little people who invested in mutual funds and pension funds that relied heavily on FM stock in the portfolio–it’s gone and that’s that… Keep working until you drop in the traces, folks, because you were stupid and let somebody else take care of the money they promised they’d invest wisely for you. Dammit, I wish we could grab all the outgoing CEO’s and upper management and just seize ALL their assets, grab it all and pass it around to those who’re really getting fucked in this deal. Leave them with nothing so they can see how it feels. Not one penny left, nothing, nada, zip. While we’re at it, I’d like to see the same happen to Halliburton, and the rest of the Enron pukes too. Let’s not forget the eleven banks that have gone tits up–let the upper management that drove those into the ground make reparations as well. Yeah, I’m a goddamned pinko communist, I got it. It just chaps my ass that those fuckers are drinking mai tai’s on a beach and slapping each other on the back at how successfully they assraped a whole bunch of poor slobs… Maybe the gun nuts have a point, perhaps it’s time to catch some of these fuckers and locate a few strategic light poles to provide an instructive example to anyone else who’s planning on something of this nature. ---
**Author:** ![Least\_Original\_User\_Name\_Ever](https://avatars.discourse-cdn.com/v4/letter/l/e480ec/32.png) [@Least\_Original\_User\_Name\_Ever](https://boards.straightdope.com/u/Least_Original_User_Name_Ever)\ **Post date:** [September 7, 2008, 7:05pm UTC](https://boards.straightdope.com/t/govt-conservatorship-of-freddie-mac-fannie-mae/462279/11 "2008-09-07T19:05:29Z")
> [@SmartAleq](#): > > I knew it was almost inevitable that this was going to happen–but if it had happened earlier it might have been a bit less expensive overall. The economy can’t support the FM’s tanking completely, that would just take the whole shebang down entirely. > > I’m just thinking about all the little people who invested in mutual funds and pension funds that relied heavily on FM stock in the portfolio–it’s gone and that’s that… Keep working until you drop in the traces, folks, because you were stupid and let somebody else take care of the money they promised they’d invest wisely for you. > > Dammit, I wish we could grab all the outgoing CEO’s and upper management and just seize ALL their assets, grab it all and pass it around to those who’re really getting fucked in this deal. Leave them with nothing so they can see how it feels. Not one penny left, nothing, nada, zip. While we’re at it, I’d like to see the same happen to Halliburton, and the rest of the Enron pukes too. Let’s not forget the eleven banks that have gone tits up–let the upper management that drove those into the ground make reparations as well. > > Yeah, I’m a goddamned pinko communist, I got it. It just chaps my ass that those fuckers are drinking mai tai’s on a beach and slapping each other on the back at how successfully they assraped a whole bunch of poor slobs… > > Maybe the gun nuts have a point, perhaps it’s time to catch some of these fuckers and locate a few strategic light poles to provide an instructive example to anyone else who’s planning on something of this nature. You say you want a revolution? ---
**Author:** ![Huerta88](https://avatars.discourse-cdn.com/v4/letter/h/82dd89/32.png) [@Huerta88](https://boards.straightdope.com/u/Huerta88)\ **Post date:** [September 7, 2008, 7:10pm UTC](https://boards.straightdope.com/t/govt-conservatorship-of-freddie-mac-fannie-mae/462279/12 "2008-09-07T19:10:49Z")
> [@SmartAleq](#): > > While we’re at it, I’d like to see the same happen to **Halliburton** , and the rest of the Enron pukes too. Let’s not forget the eleven banks that have gone tits up–let the upper management that drove those into the ground make reparations as well. Bolding mine. What’d Halliburton ever do to you (other than get a lot of government contracts that you, or I, might disagree with)? Halliburton has not stolen anyone’s money, or run anything into the ground. Nor is Halliburton a failed financial institution, or a financial institution at all. To the contrary, I wish I’d been a stockholder in Halliburton over the past five years – they’ve been riding the global commodities boom to record profits (which no, were not taken from the mouths of widows and orphans): [http://finance.yahoo.com/echarts?s=HAL#chart1:symbol=hal;range=5y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined](http://finance.yahoo.com/echarts?s=HAL#chart1:symbol=hal;range=5y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined) ---
**Author:** ![Revenant\_Threshold](https://avatars.discourse-cdn.com/v4/letter/r/f1d935/32.png) [@Revenant\_Threshold](https://boards.straightdope.com/u/Revenant_Threshold)\ **Post date:** [September 7, 2008, 7:19pm UTC](https://boards.straightdope.com/t/govt-conservatorship-of-freddie-mac-fannie-mae/462279/13 "2008-09-07T19:19:54Z")
> [@Cervaise](#): > > “Here’s our plan. We will promise to bail them out if it comes to that. Our guarantee of support will reassure everyone that the failure won’t happen, and it’ll stimulate investment, and we won’t need to bail them out.” > > “Wait, say what?” > > “By promising to rescue them, we won’t need to rescue them.” > > “Huh?” > > “Trust us on this.” > > “Yeah, let us know how that works out.” > > Fucking geniuses. It’s not a stupid plan. If something’s going to fail, then everyone with interest in it is going to want to pull that interest out rather than lose it altogether. By promising support, people will panic less and perhaps be more willing to leave their respective interests alone, and that in turn means less chance there’ll be a failure in the first place. ---
**Author:** ![SmartAleq](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/smartaleq/32/163_2.png) [@SmartAleq](https://boards.straightdope.com/u/SmartAleq)\ **Post date:** [September 7, 2008, 7:42pm UTC](https://boards.straightdope.com/t/govt-conservatorship-of-freddie-mac-fannie-mae/462279/14 "2008-09-07T19:42:55Z")
> [@Huerta88](#): > > Bolding mine. > > What’d Halliburton ever do to you (other than get a lot of government contracts that you, or I, might disagree with)? > > Halliburton has not stolen anyone’s money, or run anything into the ground. Um, I’m sorry, but whose money paid for the [no-bid contracts](http://www.tompaine.com/articles/2006/07/21/halliburtons_hella_good_deal.php)? How about the associated fraud and stolen equipment, supplies and materials? You know, the money they used to give [contaminated water](http://www.halliburtonwatch.org/news/dpc_hearing.html) to our troops and used for substandard wiring that caused others to be [electrocuted?](http://mssparky.com/2008/07/senator-casey-wants-clarification/) [Or the Nigerian bribes?](http://blogs.usatoday.com/ondeadline/2008/09/ex-kbr-chief-ad.html) That there is American taxpayer money that ended up in Halliburton’s pockets–money that can’t be used for anything else that might actually, y’know, help us here in the US. Not to mention the money we’ve already spent on investigating said no-bid contracts, misappropriation and malfeasance. That comes out of our pockets too. So yeah, Halliburton needs to be squeezed too. **LOUNE,** well, you know… 😛 ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [September 7, 2008, 7:53pm UTC](https://boards.straightdope.com/t/govt-conservatorship-of-freddie-mac-fannie-mae/462279/15 "2008-09-07T19:53:30Z")
> [@SmartAleq](#): > > …locate a few strategic light poles to provide an instructive example to anyone else who’s planning on something of this nature. Start with the guys at Merrill Lynch. ---
**Author:** ![SmartAleq](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/smartaleq/32/163_2.png) [@SmartAleq](https://boards.straightdope.com/u/SmartAleq)\ **Post date:** [September 7, 2008, 10:08pm UTC](https://boards.straightdope.com/t/govt-conservatorship-of-freddie-mac-fannie-mae/462279/16 "2008-09-07T22:08:33Z")
> [@elucidator](#): > > Start with the guys at Merrill Lynch. Hey, I’m nonecumenical–but could you give us a “greatest hits” to show why they have a pressing need to be lightpost decorations? 😛 ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [September 7, 2008, 10:18pm UTC](https://boards.straightdope.com/t/govt-conservatorship-of-freddie-mac-fannie-mae/462279/17 "2008-09-07T22:18:17Z")
> [@elucidator](#): > > Start with the guys at Merrill Lynch. Fucking A. ---
**Author:** ![vison](https://avatars.discourse-cdn.com/v4/letter/v/e47774/32.png) [@vison](https://boards.straightdope.com/u/vison)\ **Post date:** [September 7, 2008, 10:57pm UTC](https://boards.straightdope.com/t/govt-conservatorship-of-freddie-mac-fannie-mae/462279/18 "2008-09-07T22:57:32Z")
\*\*Scylla, \*\*it was your post about waterboarding that first brought me to the Straight Dope Message Board. It gave you great credibility in my mind. When I read Christopher Hitchens’ article on the same topic I kept thinking, “Yeah, but I know a guy who did it first and did it better!” Sorry for the hijack. Just had to say it. As for the Fannie and Freddie thing, I don’t understand much of it. We don’t have this system in Canada. Our mortgages are different, in many ways. The people who have mortgages with Fannie and Freddie will go on paying them, perhaps to a different bank. But, as has been pointed out above, the people who invested in those companies are screwed. This seems a lot like Enron, in many ways, but without the prospect of the evildoers being prosecuted. ---
**Author:** ![Johnny\_Angel](https://avatars.discourse-cdn.com/v4/letter/j/d26b3c/32.png) [@Johnny\_Angel](https://boards.straightdope.com/u/Johnny_Angel)\ **Post date:** [September 7, 2008, 11:09pm UTC](https://boards.straightdope.com/t/govt-conservatorship-of-freddie-mac-fannie-mae/462279/19 "2008-09-07T23:09:01Z")
I demand that as soon as the government gets control of Fannie Mae and Freddie Mac they immediately farm out the administration of these out to private companies without any oversight or regulation, because only the free market is competent to manage stewardship over a badly mismanaged free market. ---
**Author:** ![Desert\_Nomad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/desert_nomad/32/177_2.png) [@Desert\_Nomad](https://boards.straightdope.com/u/Desert_Nomad)\ **Post date:** [September 8, 2008, 7:25am UTC](https://boards.straightdope.com/t/govt-conservatorship-of-freddie-mac-fannie-mae/462279/20 "2008-09-08T07:25:58Z")
So if I make a bunch of bad decisions for my small software business, at least I know the government is there to make sure my business will never fail… of course in the end everything will have to be state owned. Yup, we sure beat those Commies in the Cold War. :rolleyes: Why is it that the people that save and are responsible always get screwed? [Next page](https://boards.straightdope.com/t/govt-conservatorship-of-freddie-mac-fannie-mae/462279.md?page=2)