Cross-posted at The Underground Conservative.
Albert Einstein once defined insanity as “doing the same thing over and over again and expecting different results.”
Welcome to Barack Hussein Obama’s definition of insanity, which pretty much matches that of Einstein.
Part One of the story came late last year, when the Treasury Department under the stewardship of Turbo Tax Cheat Tim Geithner quietly lifted the caps on the money provided to Fannie Mae and Freddie Mac.
New York – — The government has handed its ATM card to beleaguered mortgage giants Fannie Mae and Freddie Mac.
The Treasury Department said Thursday it removed the $400 billion financial cap on the money it will provide to keep the companies afloat. Already, taxpayers have shelled out $111 billion to the pair, and most analysts hadn’t expected the companies to hit the limit.
Not just the ATM card, mind you, but the PIN to go along with it. Remember: it was the collapse of Fannie Mae and Freddie Mac having purchased bundles of worthless home loans and mortgages that had been granted under pressure from the Clinton administration that triggered the collapse of the housing market in 2008.
Of course, Our Lord and Savior has his own shady ties to Fannie Mae and Freddie Mac as well. This from the 2008 campaign:
A group called the Center for Responsive Politics keeps track of which politicians get Fannie and Freddie political contributions. The top three U.S. senators getting big Fannie and Freddie political bucks were Democrats and No. 2 is Sen. Barack Obama.
Now remember, he’s only been in the Senate four years, but he still managed to grab the No. 2 spot ahead of John Kerry — decades in the Senate — and Chris Dodd (the Senator from Countrywide: ed), who is chairman of the Senate Banking Committee.
Fannie and Freddie have been creations of the congressional Democrats and the Clinton White House, designed to make mortgages available to more people and, as it turns out, some people who couldn’t afford them.
Fannie and Freddie have also been places for big Washington Democrats to go to work in the semi-private sector and pocket millions. The Clinton administration’s White House Budget Director Franklin Raines ran Fannie and collected $50 million. Jamie Gorelick — Clinton Justice Department official — worked for Fannie and took home $26 million. Big Democrat Jim Johnson, recently on Obama’s VP search committee, has hauled in millions from his Fannie Mae CEO job.
That’s right. Two of Obama’s homeboys were getting filthy rich off Fannie and Freddie while the two quasi-government agencies were swirling in the terlet bowl, so to speak.
Now comes Part Two: Fannie and Freddie, complete with no limit on the ATM card and the taxpayers’ PIN, will once again be buying back bad home loans and mortgages.
WASHINGTON – Government controlled mortgage finance companies Fannie Mae and Freddie Mac said Wednesday they will buy back troubled loans contained in securities they have already sold to investors.
The two companies are repurchasing mortgage loans for which borrowers have missed at least four months of payments. At the end of last year, Fannie had about $127 billion of such loans, while Freddie Mac had about $70 billion.
Fannie Mae, based in Washington, and its McLean, Va., rival Freddie Mac have been run under tight government oversight since they almost collapsed in September 2008. They have required $111 billion in federal aid to stay afloat.Late last year the Obama administration pledged to cover unlimited losses through 2012 for both companies, lifting an earlier cap of $400 billion. That gave Fannie and Freddie more leeway to buy back delinquent loans.
This has epic FAIL written all over it. This is what got Fannie and Freddie into so much trouble they needed a taxpayer bailout to avoid collapse less than 18 months ago.
And it’s not like the taxpayers’ bailout of Fannie and Freddie did much good:
Freddie and its larger rival, Fannie Mae, were among the first big financial institutions to receive massive federal bailouts after the financial crisis hit in 2008. Government officials have been racing to fix bailed-out car makers and banks and are pushing to reshape the financial-services industry. But Fannie and Freddie remain troubled wards of the state, with no blueprints for the future and no clear exit strategy for the government.
Nearly a year and a half after the outbreak of the global economic crisis, many of the problems that contributed to it haven’t yet been tamed. The U.S. has no system in place to tackle a failure of its largest financial institutions. Derivatives contracts of the kind that crippled American International Group Inc. still trade in the shadows. And investors remain heavily reliant on the same credit-ratings firms that gave AAA ratings to lousy mortgage securities.
Fannie and Freddie, for their part, remain at the core of a housing-finance system that inflated a dangerous housing bubble. After prices collapsed, sending shock waves around the world, the federal government put America’s housing-finance system on life support. It has yet to decide how that troubled system should be rebuilt.
Remember: the ones who tried to reform Fannie and Freddie were President Bush in 2003 and Sen. John McCain (R-Ariz.) in 2005. They were rebuffed by the likes of the Senator from Countrywide and the Banking Queen, Bawney Fwank, whose paramour was a top executive with Fannie.
This is a recipe for disaster, another ticking time bomb that will go off at some unknown point. What is known is what effect it will have when it goes off.
Same song, second verse.