# Palin has no idea how Fannie Mae and Freddie Mac operate **URL:** \ **Category:** Great Debates\ **Created:** [September 8, 2008, 8:26pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665 "2008-09-08T20:26:30Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![LonghornDave](https://avatars.discourse-cdn.com/v4/letter/l/a87d85/32.png) [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)\ **Post date:** [September 8, 2008, 10:26pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/21 "2008-09-08T22:26:39Z")
> [@Maeglin](#): > > I disagree. From my reading, Palin implied that McCain has been lobbying for years to trim down the taxpayer-funded organization of the mortgage guarantors. This is what is criminally stupid, as they are not government agencies. The government was always assumed to be the bearers of the FM risk, but the organizations themselves were up until now completely private. McCain had no more power to lobby for them to be trimmed down than he could lobby to have people laid off at Microsoft. You are off base here. FNMA has been allowed to operate without the capital requirements imposed on other financial institutions. This goverment provided exemption is one of the chief reasons why the company is over leveraged and unable to absorb the losses it has incurred. A senator would definitely have the power to lobby to get rid of that exemption. I don’t know if McCain has done so, but don’t act like FNMA is just your average company like Microsoft. It clearly was operating under a different set of rules from other financial institutions. ---
**Author:** ![Diogenes\_the\_Cynic](https://avatars.discourse-cdn.com/v4/letter/d/e99b99/32.png) [@Diogenes\_the\_Cynic](https://boards.straightdope.com/u/Diogenes_the_Cynic)\ **Post date:** [September 8, 2008, 10:28pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/22 "2008-09-08T22:28:10Z")
> [@Hamlet](#): > > Sure, if you think verb tense means nothing, or that it was a misspeaking not a lack of knowledge. She said: “The fact is that Fannie Mae and Freddie Mac **have gotten** too big and too expensive to the taxpayers.” Generally, “have gotten” refers to a past occurrence, not a future possibility. > > I’m sure it is possible that she’s extremely well informed about the banking crises, the War in Iraq, and the myriad of other things we don’t know about her. And I suppose she could have meant “have gotten too big and [will be] too expensive to the taxpayers.” > > I just think those possibilities fly in the face of common sense. I think we also need to hammer home to **Bricker** that **Palin didn’t say anything about a bailout.** Bricker conflated Palin’s words with the author of of the article and is under the impression that she understood more than what her quote really indicates. ---
**Author:** ![Menocchio](https://avatars.discourse-cdn.com/v4/letter/m/9de053/32.png) [@Menocchio](https://boards.straightdope.com/u/Menocchio)\ **Post date:** [September 8, 2008, 10:36pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/23 "2008-09-08T22:36:05Z")
Guys, you’re giving Palin way too little credit here. She’s a sharp political operator (and by no means an innocent everywoman hockey mom). She (or if you insist, whoever wrote that remark for her) knows that Freddie and Fannie weren’t taking any tax money until this weekend. She was _lying_. She was conflating problems caused by big business with big government and applying conservative solutions to it. It’s a way to smear liberalism and boost conservatism even while taking on a problem that has very little to do with either ideology. That’s what this campaign does now. It lies. Over and over again. Expect an unending stream of bullshit from them, and especially from self-declared pitbull Palin, from here until Nov 4. ---
**Author:** ![mswas](https://avatars.discourse-cdn.com/v4/letter/m/e99b99/32.png) [@mswas](https://boards.straightdope.com/u/mswas)\ **Post date:** [September 8, 2008, 10:38pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/24 "2008-09-08T22:38:21Z")
> [@Maeglin](#): > > This doesn’t make any sense to me. If FM had gotten “too big for the taxpayers”, then why is the government buying it? It doesn’t seem to me to be so obviously stupid. Poorly articulated yes, obviously stupid, no. ---
**Author:** ![Shayna](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/shayna/32/17976_2.png) [@Shayna](https://boards.straightdope.com/u/Shayna)\ **Post date:** [September 8, 2008, 10:38pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/25 "2008-09-08T22:38:33Z")
> [@Bricker](#): > > And to support your claim that you liberals aren’t the only ones who take issue with her comments, you provide a cite to [mnpublius.com](http://mnpublius.com), which is a reasonably politically neutral collection of reports and blogs. No, I linked to the first cite that actually contained the QUOTED SOURCE MATERIAL THAT I PUT IN QUOTE BRACKETS. Why do you give a shit where that quote was posted? How about you respond to the, you know, actual CONTENT? > [@Bricker](#): > > I’ll get right on that. I expect to be done some time after you heed the advice of your fellow Democrat Joe Liberman. I see you’d just as soon stay ignorant, as you clearly have no clue what I linked to, or the actual advice that was provided therein if you think it’s remotely “equal but opposite” to Joe Lieberman’s advice. ---
**Author:** ![LonghornDave](https://avatars.discourse-cdn.com/v4/letter/l/a87d85/32.png) [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)\ **Post date:** [September 8, 2008, 10:41pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/26 "2008-09-08T22:41:15Z")
> [@Maeglin](#): > > This doesn’t make any sense to me. If FM had gotten “too big for the taxpayers”, then why is the government buying it? I agree that the phrase “too big for the taxpayers” is awkward. I also don’t think it is much of a gaffe. Further, I wouldn’t exactly say the government is buying them. They seem more to be confirming that the implied guaranty that everyone thought existed does exist. They are bailing them out. ---
**Author:** ![LonghornDave](https://avatars.discourse-cdn.com/v4/letter/l/a87d85/32.png) [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)\ **Post date:** [September 8, 2008, 10:55pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/27 "2008-09-08T22:55:08Z")
> [@Menocchio](#): > > She was conflating problems caused by big business with big government and applying conservative solutions to it. It’s a way to smear liberalism and boost conservatism even while taking on a problem that has very little to do with either ideology. I don’t really see the smear to liberalism that you are referring to. Nor do I see the boosting of conservatism. Perhaps it would be helpful to know exactly what reforms McCain has been calling for in the past. ---
**Author:** ![Maeglin](https://avatars.discourse-cdn.com/v4/letter/m/8baadc/32.png) [@Maeglin](https://boards.straightdope.com/u/Maeglin)\ **Post date:** [September 8, 2008, 11:05pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/28 "2008-09-08T23:05:28Z")
> [@LonghornDave](#): > > You are off base here. FNMA has been allowed to operate without the capital requirements imposed on other financial institutions. This goverment provided exemption is one of the chief reasons why the company is over leveraged and unable to absorb the losses it has incurred. A senator would definitely have the power to lobby to get rid of that exemption. I don’t know if McCain has done so, but don’t act like FNMA is just your average company like Microsoft. It clearly was operating under a different set of rules from other financial institutions. Obviously FMNA is not your average corporation. It has an unusual relationship with the government, but it is not a government agency that has simply grown too large or inefficient. As you articulate, it is not the problem. There was never a taxpayer payment of any kind before the bailout. One can argue that FNMA’s capital requirements were too low and it was holding too many bad mortgages on its balance sheet. One can argue that there was insufficient government oversight. One can even argue that this bailout should not happen at all. But it is nonsensical to argue that this was costing the taxpayer too much money, since no taxpayer liability existed before the bailout, except a vague guaranty of a bailout in the minds of its bondholders. McCain’s own connection is unclear. It is worth noting that Culvahouse, his trusted adviser and VP selector, was a lobbyist for Fannie Mae. ---
**Author:** ![LonghornDave](https://avatars.discourse-cdn.com/v4/letter/l/a87d85/32.png) [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)\ **Post date:** [September 8, 2008, 11:07pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/29 "2008-09-08T23:07:13Z")
> [@Menocchio](#): > > Guys, you’re giving Palin way too little credit here. She’s a sharp political operator (and by no means an innocent everywoman hockey mom). She (or if you insist, whoever wrote that remark for her) knows that Freddie and Fannie weren’t taking any tax money until this weekend. She was _lying_. Would you agree that the government has provided FNMA and FHLMC with benefits that have value? Further, would you also agree that some of these benefits have essentially been backed by the government’s ability to tax? If yes to both then I believe it is correct to state that they have had a cost to tax payers. It is probably true that Palin (and McCain, Obama, and Biden for that matter) have very little clue about how these government sponsored entities work. She probably was just reading something that someone else wrote for her. I still don’t think what she said is that stupid. I bet if she (or any of the candidates) had to answer questions then the stupidity would come out. ---
**Author:** ![LonghornDave](https://avatars.discourse-cdn.com/v4/letter/l/a87d85/32.png) [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)\ **Post date:** [September 8, 2008, 11:16pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/30 "2008-09-08T23:16:35Z")
> [@Maeglin](#): > > There was never a taxpayer payment of any kind before the bailout. One can argue that FNMA’s capital requirements were too low and it was holding too many bad mortgages on its balance sheet. One can argue that there was insufficient government oversight. One can even argue that this bailout should not happen at all. > > But it is nonsensical to argue that this was costing the taxpayer too much money, since no taxpayer liability existed before the bailout, except a vague guaranty of a bailout in the minds of its bondholders. I see your point. However, the implied government guaranty allowed them to borrow at lower rates than your average company. This seems to indicate that the guaranty was more than just a vague notion. On a related note, do you think that the taxpayer has no liability or cost for GNMA? ---
**Author:** ![Maeglin](https://avatars.discourse-cdn.com/v4/letter/m/8baadc/32.png) [@Maeglin](https://boards.straightdope.com/u/Maeglin)\ **Post date:** [September 8, 2008, 11:31pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/31 "2008-09-08T23:31:17Z")
> [@LonghornDave](#): > > I see your point. However, the implied government guaranty allowed them to borrow at lower rates than your average company. This seems to indicate that the guaranty was more than just a vague notion. I see your point as well. So if I were King, there would be an accounting reserve on the government’s balance sheet against the likelihood of FNMA default. Since there is no such reserve, I can only conclude that the government believed that the likelihood of default was vanishing, and that low interest loans were extended as a result of a very murky political process. Everyone believed that the government was willing to hold the bag, but for a very long time, no one believed it would have to. This, plus the politics of personal influence, got the loans originated at very low cost. > [@](#): > > On a related note, do you think that the taxpayer has no liability or cost for GNMA? I don’t know. GNMA received a fee from issuers and lenders to guarantee the ABS. I don’t know enough about the details of GNMA financials to estimate whether their fees and equity can guarantee the payments of the weak bonds. ---
**Author:** ![Menocchio](https://avatars.discourse-cdn.com/v4/letter/m/9de053/32.png) [@Menocchio](https://boards.straightdope.com/u/Menocchio)\ **Post date:** [September 9, 2008, 12:03am UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/32 "2008-09-09T00:03:48Z")
> [@LonghornDave](#): > > I don’t really see the smear to liberalism that you are referring to. Nor do I see the boosting of conservatism. Perhaps it would be helpful to know exactly what reforms McCain has been calling for in the past. It’s all pretty vague and boilerplate, as such bullshit need be. Just look at the key words: -Got too big -Cost taxpayers money -Make it smaller She’s acting as if Fannie/Freddie are overgrown government bureaucracies crippled by their own waste and inefficiencies, which they aren’t and that’s not what happened to them, and hoping that enough of her audience won’t know the difference. By associating Fannie/Freddie with big government, she appeases the right (who might have objected to such a blatant example of interventionist government), and tries to bring centrists to the right. ---
**Author:** ![treis](https://avatars.discourse-cdn.com/v4/letter/t/bc79bd/32.png) [@treis](https://boards.straightdope.com/u/treis)\ **Post date:** [September 9, 2008, 2:28am UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/33 "2008-09-09T02:28:16Z")
> [@Pochacco](#): > > At [a press conference today](http://www.mcclatchydc.com/227/story/51940.html) Sarah Palin said: “And that’s why John McCain has been calling for years to reform things and cut bureaucracy even at the lending agencies our government supports. The fact is that Fannie Mae and Freddie Mac have gotten too big and too expensive to the taxpayers. The McCain / Palin administration will make them smaller, and smarter, and more effective for homeowners that need help.” Sorry, but there is no wiggle room for Palin apologists here. Her first sentence dooms any chance of this paragraph being correct. The first, and most obvious problem, is that the Federal Government had zero control over how the FMs were run. There is no way for McCain to “reform things and cut bureaucracy” at the FMs. It’s just flat out an incorrect statement, and shows that she doesn’t grasp the problems surrounding FM. The second problem is that there was no problem with a bloated bureaucracy or problems that needed reform in running the FMs. Proffering cutting bureaucracy or reforming things as a solution that would have prevented this crisis shows a lack of understanding why the crisis occurred. ---
**Author:** ![Camus](https://avatars.discourse-cdn.com/v4/letter/c/ba8739/32.png) [@Camus](https://boards.straightdope.com/u/Camus)\ **Post date:** [September 9, 2008, 2:37am UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/34 "2008-09-09T02:37:17Z")
For the most part, Bush has been immune from any fallout resulting from his verbal gaffes, even when they imply a misunderstanding of whatever it is he’s talking about. I don’t know why they would suddenly start affecting Palin and/or McCain. ---
**Author:** ![Frostillicus](https://avatars.discourse-cdn.com/v4/letter/f/e9bcb4/32.png) [@Frostillicus](https://boards.straightdope.com/u/Frostillicus)\ **Post date:** [September 9, 2008, 2:41am UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/35 "2008-09-09T02:41:53Z")
Palin could say that Iraq is located in South America and the right-wing would rush to her defense with explanations as to why she actually is correct. “She was actually referring to Iraq, Peru, a small mining town in the Andes. Why do you liberals keep nit-picking every little thing she says? Media bias!!!” ---
**Author:** ![Diogenes\_the\_Cynic](https://avatars.discourse-cdn.com/v4/letter/d/e99b99/32.png) [@Diogenes\_the\_Cynic](https://boards.straightdope.com/u/Diogenes_the_Cynic)\ **Post date:** [September 9, 2008, 2:47am UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/36 "2008-09-09T02:47:27Z")
The only way the hard right would turn on her would be if she started to moderate her lunatic social positions. Like if she admitted that teh Gay could not be cured or said she’d changed her mind on allowing abortions for rape victims. If they ever start thinking she’s a moderate, they’ll turn on her like that. ---
**Author:** ![OneChance](https://avatars.discourse-cdn.com/v4/letter/o/74df32/32.png) [@OneChance](https://boards.straightdope.com/u/OneChance)\ **Post date:** [September 9, 2008, 2:54am UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/37 "2008-09-09T02:54:02Z")
All of this ridiculous nitpicking of verbal gaffes is insane. “57 states,” “too expensive to the taxpayers,” “Czechoslovakia.” Who cares? We’re all smart enough to know what they meant. No one could go from press conference to interview to whatever else as much as these politicians do and not make at least one verbal gaffe each time. ---
**Author:** ![Menocchio](https://avatars.discourse-cdn.com/v4/letter/m/9de053/32.png) [@Menocchio](https://boards.straightdope.com/u/Menocchio)\ **Post date:** [September 9, 2008, 3:01am UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/38 "2008-09-09T03:01:55Z")
> [@Diogenes\_the\_Cynic](#): > > The only way the hard right would turn on her would be if she started to moderate her lunatic social positions. Like if she admitted that teh Gay could not be cured or said she’d changed her mind on allowing abortions for rape victims. If they ever start thinking she’s a moderate, they’ll turn on her like that. There’s got to be a few dozen strict fiscal conservatives left who would raise eyebrows over this bailout. She’s hoping to confuse and please them, as well as the center with this remark. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [September 9, 2008, 3:15am UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/39 "2008-09-09T03:15:50Z")
I’m not sure why you think ‘too big and too expensive for the taxpayers’ can’t be interpreted as, ‘too big and too much of a liability for taxpayers’. And frankly, even if she thought that Fanny Mae and Freddie Mac had a taxpayer subsidy component to them, well, being unclear on the details of something as opaque and convoluted as this isn’t exactly the sign of stupidity or gross ignorance. If she had been voting on bills involving them, that might be another matter. Speaking of that… When Barack Obama was asked what he thought of the problems at the Hanford nuclear waste disposal site, he hummed and hawed and then said he wasn’t really familiar with Hanford. This despite the fact that he had already been in the Federal government for some time, and had actually voted on a bill involving Hanford, and Hanford is a huge Federal environmental issue. The thing is, for some reason when he said that the media didn’t run around trumpeting his ignorance. They just let it go. And no one other than me mentioned it on this board. Double standard much? ---
**Author:** ![Diogenes\_the\_Cynic](https://avatars.discourse-cdn.com/v4/letter/d/e99b99/32.png) [@Diogenes\_the\_Cynic](https://boards.straightdope.com/u/Diogenes_the_Cynic)\ **Post date:** [September 9, 2008, 3:34am UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/40 "2008-09-09T03:34:42Z")
> [@OneChance](#): > > All of this ridiculous nitpicking of verbal gaffes is insane. “57 states,” “too expensive to the taxpayers,” “Czechoslovakia.” Who cares? We’re all smart enough to know what they meant. No one could go from press conference to interview to whatever else as much as these politicians do and not make at least one verbal gaffe each time. There’s verbal gaffes and there are actual gaps in knowledge. Palin’s statement was not a slip of the tongue, she really was factually mistaken. [Previous page](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665.md?page=1) [Next page](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665.md?page=3)