In last week's look ahead to the economic dangers lurking for 2010, Wall Street & Maine made a critical mistake. In the section of the blog concerning the lifting of caps on the amount of money Fannie Mae and Freddie Mac could be given by the Treasury, WS&M blamed Congress. Alas, Congress had nothing to do with this beyond passing the original legislation that made it possible for the Administration to unilaterally make this decision.
In WS&M's defense, 2009 was coming to an end, mercifully, and the thought process became somewhat muddled on account of an unanticipated whimsical fantasy that intruded on the creative process: Would it not be simply marvelous if Barney Frank and Nancy Pelosi could team up and make a new recording of the song "Something Stupid" under the stage name of Frank & Nancy? It is such a fine song, and, well, the vision of Barney Frank singing the words "...we dwop into a quiet wittu pwace and have a dwink aw two..." apparently caused a short circuit in WS&M's finely tuned thinking machine.
WS&M regrets the error but does not regret pointing out this action by the Obama Administration. A good piece on the potential ramifications of this action appeared on the Wall Street Journal online on Sunday. One quote from said piece: "Fan and Fred are now designed to lose money, transferring wealth from renters and homeowners to overextended borrowers."
Hmmm. WS&M does not think those powers accrue to the Executive Branch from the either the Fannie or Freddie charters or the U.S. Constitution. Looks, smells and sounds like the Obamacrats continue moving pell mell toward establishing the people's republic of Obamamerica, where all that matters is people who don't and their collective fealty to the great leader.
What the Treasury Department has done, under cover of legislation meant to prevent a collapse of the global economic system, is turned Fannie Mae and Freddie Mac, which trace their roots to the Depression-era scarcity of capital for mortgages, into a low-income housing program far beyond the wildest dreams, err hallucinations, of the most acid-addled '60s radicals. As the Journal article points out, the scheme Treasury has cooked up keeps Fannie and Freddie's expenditures off the country's books. That means Congress doesn't get to approve expenditures, the numbers can be swept under the rug or blamed on capitalist vermin investors and the Administration can continue to hand out mortgages to people who can't--or won't--pay them down.
The cynical side of WS&M sees a silver lining in this, at least for home builders who can figure out how to build affordable low-income housing that meets the stringent energy codes contained in Henry Waxman's cap-and-trade bill and still make a profit. It's only a matter of time before Obama merges Fannie and Freddie with HUD, thus putting HUD's budget beyond the reach of Congress as well. Suck up to HUD, and Obama, and you'll get lots of work.
Something stupid indeed.
