Palin has no idea how Fannie Mae and Freddie Mac operate

[LonghornDave]

@Maeglin

If we assume that she meant liability instead of expense, then how can she justify her current support for the bailout? If you believe the liability is too large, then reform the organization to reduce the liability. If it’s “too big for the taxpayers”, then how can she justify passing the buck on to everyone else? If it is too big, then don’t guaranty the loans and either work to reform FNMA or just watch it die.

I’m not seeing the contradictions that you see here. It’s a big liability, but she presumably feels like the collapse of the institutions is worse than seizing control. This would fit with the comment in the Wall Street Journal today where they (McCain and Palin) say that the bailout is “outrageous, but sadly necessary”.

How could they reduce the liability by reform? It is what it is. The alternatives seem to be: a) let them fail; or b) take control. Reform should either have happened years ago or after they are stabilized. I don’t see how they can be reformed in the short-term in order to avoid a failure. Therefore, you are left with two alternatives and you pick the most tolerable of the two.

[LonghornDave]

@Shayna

To both Bricker and LonghornDave; you guys seem to have lost track of the original quote by Sarah Palin.

She did not substitute the term “taxpayer expense” for “taxpayer liability”.

No, what she said, again, was, “Fannie Mae and Freddie Mac have gotten too big and too expensive to the taxpayers.” She then went on to say that under their administration, they would make them “smaller and smarter.”

HUH?

The only way to grok her meaning as anything other than what she plainly said, is to bend over sideways, squint one eye, hop up and down on one foot, and flap your arms like a bird while you’re listening to it. Otherwise, it doesn’t say what you interpret it to say.

There is a HUGE difference between an expense and a liability. And while I don’t expect every non-accountant type person to understand or use them correctly, I most certainly do expect the vice president of the United States to be able to do so – especially in a prepared stump speech that she had time to study for!

But at least I can say thank you to Bricker for finally addressing the actual point.

It doesn’t take nearly the amount of gymnastics you seem to think it does to go from an expense to a liability. All a liability is, is a future expense. What is this HUGE difference between the two? They are extremely closely related. Further, she is making a statement to the general public. What did you expect her to do, pull out FNMA’s 10Q and go into an in depth discussion on their financial statements. If we want to get really technical, they have picked up a ton of assets, a ton of liabilities, a future stream of revenues, future expenses. What she said is good enough for the general public.

[treis]

@LonghornDave

So you don’t think the following items would be a meaningful reforms that could be enacted by the Federal Government?

1. Increase the Risk Based Capital Requirement to be equal to that of Federally Chartered Commercial Banks,
2. Require the same financial reporting (10Ks and 10Qs) as required by the SEC for other public companies.

Probably not, but that’s besides the point isn’t it? You’re cherry picking her quote, taking parts of it out of context, and spinning it into a sort of correct statement. She said “reform things and cut bureaucracy”. In that context it’s extremely unlikely that the reforms she was speaking of were technical changes in the regulatory apparatus. It’s much, much more likely that when she says “reform things and cut bureaucracy”, that the “reform things” implies changing the way the FMs does business. For example, things like modernizing data systems, reducing overhead, and reorganizing departments.

If she said that we need to reform Social Security, do you think she is talking about a technical regulatory change, or changing the way the SSA functions? It’s pretty obvious to me that it is the latter.