Tuesday, July 22, 2008

A combover will help things

Hopefully congress does not act until after the books have been looked over. And hopefully they do not believe everything they are told. And hopefully we have another set of impartial eyes also combing over the books. However, just how is the Fed's analysis of Fannie Maes and Freddie macs books going to be. It seems the bailout is imminent and that the only numbers to be generated will be ones that push towards the bailout.

Here is an article from the New York Times regarding Treasury Secretary Paulson's comments to the New York Times. The article is titled As Financers Are Inspected, Bush Prods Congress. It sounds to us as if the inspection is for justification and pressure purposes, rather than an honest investigation. What do you think?

Bank examiners from the Federal Reserve and the Comptroller of the Currency are inspecting the books of the nation’s two largest mortgage finance companies, Fannie Mae and Freddie Mac, as the Bush administration prods Congress to approve a plan that would enable it to inject billions of dollars into the companies.

Treasury Secretary Henry M. Paulson Jr., in a meeting on Monday with reporters and editors of The New York Times, said the Fed and the comptroller’s office began combing the books of the two companies after their declining stock prices caused widespread anxiety in the market. The two companies guarantee or own almost half of the home mortgages in the United States. The Bush administration is hoping they can be the engine that pulls the housing market out of its yearlong slide.

Some lawmakers and critics are concerned that a further sharp erosion in housing prices could lead to more foreclosures than Fannie and Freddie could absorb without a large investment or loan from the government, which would involve committing taxpayer funds.

Mr. Paulson said he expected that the conclusion of the examination by the Fed and the comptroller would provide an important signal of confidence to the markets.


For the Fed, the assignment is the latest expansion in recent months of its role in the markets. As investment banks have made use of the Fed’s lending programs after the rescue of Bear Stearns, Fed officials have been more heavily involved in supervising those institutions than any time in its history.

The government has been adopting new measures to help the various finance industries. Aside from the Bear Sterns "rescue" how more tax payer monies should go into propping up irresponsible entities. We saw from yesterday that the government was just as negligent as other institutions. But now we should trust them with a blank check for 18 months? Will they really fix things or rob us blind?

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