Fannie Mae & Freddie Mac - Worst Case Scenario

Washington, DC, Sep 8th, 2008 -- With the decision made to bail out the private shareholders in Fannie Mae and Freddie Mac the lunacy of political corruption has reached new heights. This totally bizarre attempt at providing an essential part of the mortgage market without smacking of being even a little bit Socialist has created the worst possible scenario that was destined to fail. The public entity owned by private shareholders.

The whole history of these two corporations in recent years has been an exercise in excess beyond the comprehension of the rest of the world, Under Clinton Franklin Raines took the already corrupt entity to heights that made the Mafia jealous. Reports indicate the fabrication of figures to the tune of $10 billion. In any other country the result would have been Nationalization and long prison sentences. Under Clinton it was long bonuses, and another taxpayer bailout.

The corruption just got worse under Bush, and everyone pushed the blame onto someone else.

Forget buying out shareholders, bring the two entities into public ownership, cancel bonuses and any payments to past officers for their part in the fraud. Start an investigation and in the meantime send the players, including Berney Frank to jail awaiting trial. This must be the biggest fraud on the planet.

But the signs have been obvious for years, as they were with ENRON. Where there is no oversight, or investigation there will be unfettered corruption. When journalists and analysts uncover these flagrant abuses they are threatened with massive litigation, and as the judges are political appointees, often funded from the same sources, the results are inevitable. The public may cry "Where were the media" and the answer is "Battened down by lawyers".

There was no oversight of the activities as they transformed from one of Public Service, to one of speculation, manipulation and massive greed for profits. There was no oversight as bonuses and payments to quasi government officials spiraled into the millions.

How many more indicators will be ignored before Directors start doing Due Diligence and listening to Analysts. The situation is going from bad to worse, and the Ostriches want to hide their head in the sand, and hope the Arabs will bail them out, then it will be back to Business as Usual.

My indications indicate that there is more to come, and maybe we haven't seen the worst. Things could change, and I hope they do. Looking at our global situation board it appears that there are many Perfect Storms bailing down on us, one after the other. The Land of the Free has no Safety Nets to prevent another Great Depression from crippling the workers, or anyone else for that matter. Bush is already floating the end of Social Security, hinting that we should "Take Ownership" for our lives.

 

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